Secretary of State Hillary Clinton launches an intense week of Middle East diplomacy in Egypt Tuesday, joining Israeli Prime Minister Benjamin Netanyahu and Palestinian President Mahmoud Abbas for their next round of face-to-face peace talks.

She begins in the Egyptian resort of Sharm el-Sheikh, then plans to move on to Jerusalem on Wednesday and the West Bank and Jordan on Thursday.

Looming over this week’s talks is the Sept. 26 expiration of a partial Israeli West Bank settlement freeze. Netanyahu has said publicly he can’t extend a total moratorium, and the Palestinians have said they can’t continue peace negotiations without the freeze continuing.

One Washington Jewish community activist said Netanyahu might agree to extend the moratorium temporarily, perhaps for 30 days to 90 days – as the direct talks progress.

President Barack Obama told reporters last week he already has proposed as much. “What I have said to Prime Minister Netanyahu is that given, so far, the talks are moving forward in a constructive way, it makes sense to extend that moratorium so long as talks moving in constructive way,” Obama said.

“Ultimately, the way to solve the problem [is to get agreement]: what’s going to be Israel, what’s going to be the state of Palestine,” he added. “If you can get that agreement, you can start constructing anything that the people of Israel see fit in undisputed areas.”

Meanwhile, the outlines of a possible alternative "compromise" are emerging, under which Israel would permit the resumption of some vertical construction in some West Bank settlement blocs that it expects to remain part of Israel and to be “swapped” for other land that would go to a Palestinian state, but not permit building in other disputed land.

As yet, Palestinian officials have told the Obama administration they would walk out on the talks if such construction resumes.

“I don’t think it’s resolved yet, and people who need to be on board with it are not on board with it,” said Hussein Ibish of the American Task Force for Palestine.

A new report by Peace Now said should Israel permit resumed building in West Bank settlements, there are some 2,000 housing units that could get under construction right away, and up to 13,000 housing units in some stage of approval that could eventually be built.

“When Netanyahu says we need creative solutions to old problems, I think he’s referring to land swaps, but he hasn’t said it,” said David Makovsky of the Washington Institute for Near East Policy on a call arranged by the Israel Project Monday.

“Then there’s the practical plane,” he went on. “Here…you need something where you say if Israel's going to build in the blocs that it’s only in – it’s upward and not outward. ...To me, a combination of the conceptual and the practical could be useful in looking for a solution.”

Other Washington Middle East watchers said they expect a compromise. Barring that, there’s a possible fall-back plan of sorts, one former U.S. official said: Israeli Defense Minister Ehud Barak, who has the power to legally block any construction in the West Bank, would not approve new construction for military reasons.

“If they are going to come up with that kind of compromise – what’s in and what's outside [of a future Israeli-Palestinian state], they are already negotiating core issues,” said a second Washington Middle East hand who consults closely with the Obama administration.

As one sign of movement towards a settlements compromise, the Washington Middle East expert noted that Netanyahu “has been making a hullabaloo” about Palestinian officials having to recognize Israel as a “Jewish state.”

“This is a very raw, patriotic, popular demand .that [Netanyahu] can use to give himself political cover,” should he bend towards Abbas on settlements, the expert suggested.

Abbas is scheduled to come to New York next week for the opening session of the United Nations General Assembly. And Israeli sources expected Netanyahu would also lead the Israeli delegation to New York, although that has not yet been officially announced.

Clinton is scheduled to go to New York for U.N.-related events on Sunday, an aide said, and Obama will follow later in the week.