I suspect (given your other comments) that you are familiar with the realpolitik of the middle east - there are no lily white good guys. Of course Arafat funded terrorists!
My view is that the Israelis viewed him as "the devil they knew", and that he was infinitely preferable (and more controllable) than Hamas.
It's true that Arafat didn't want a complete peace deal (he turned down the alleged Barak offer to split Jerusalem or whatever it was), but it's not at all clear to me that there was any Palestinian leader with anything like real power who did want a deal. I mean.. Abbas? Seriously?
Sharon endorsed the Road Map for Peace put forth by the United States, European Union, and Russia, which opened a dialogue with Mahmud Abbas, and announced his commitment to the creation of a Palestinian state in the future.
Has any Israeli PM not endorsed whatever the latest peace plan is? Even Netanyahu sometimes says things that could be read as an endorsement if you didn't know better. The endorsement is meant for US consumption.
OTOH Sharon's plan (essentially isolation from the Palestinian territories) wasn't the worse plan ever, and even sort of worked.
Oh hell.. I'm persuading myself that you might be right. Persuade me of this: killing Arafat would / did not prevent Fateh from acting as a counterweight to Hamas. In fact, it's likely that Fateh was ultimately a far better counter-weight to Hamas with Abbas at the helm.
That clearly failed, and to me it was obvious even at the time that Fatah would lose Gaza. Why do you think otherwise?