defiantly? So you really think that the Hamas would abide by a democratic result that removes it from power? After it took power in Gaza by force, killing many Palestinians (hundreds!) that belonged to Fatah? I think there's little indication that Palestinians in power are interested in democracy, human rights, personal freedoms etc. Neither Fatah/PA nor Hamas. If Israel withdrew unilaterally from the entirety of the west bank it'd be a carbon copy of Gaza. Militarized, dug up with tunnels, rockets aimed at Israel, Jihadi antisemitic education system, zero human rights, rule by force, corruption. The only reason the PA is able to keep existing is because the IDF is supporting it, otherwise the Hamas would already be ruling the west bank cities (and/or Israel would retake them and re-establish the military rule over them).
There's a path to Israeli citizenship for Arabs living in east Jerusalem and Israel has de-facto annexed it. But Israel did allow the 2006 elections to happen there. I wasn't really aware of the details about 2021 but I think you forgot to mention that Hamas refused to allow the elections to take place in Gaza (and participate at all?). At the end of the day this is just another political battle tool. I think it would make sense for the Palestinians to have elections in the areas under their control, by insisting on extending those to areas not in their control they are making a political statement and trying to push towards the outcome they want to see. It's only fair that Israel pushes the opposite direction towards the outcome it prefers to see. There is still a dispute and the sides do not agree. If Palestinians were truly concerned about democracy they would restrict the process to the areas they control ("A" territory in the west bank and Gaza) which would make sense, i.e. give the people that live in areas under Palestinian control a say in who runs those areas, and wouldn't really make a statement as to what the eventual agreement would look like.