The Lateran Treaty could be a model for the solution of the Jerusalem situation but there are peculiar circumstances that would prevent its implementation.
Although it is NOT a secular state, the Vatican City-State is considered under international law and comity as a sovereign and independent State.
Would Israel, which considers Jerusalem its "eternal" capital, and the Palestinian Authority, which considers "East Jerusalem" as its futre capital, agree to have the entire city becoming "sovereign and independent?"
Will the parties agree to de-secularize Jerusalem and cede sole control over to the "religious authorities" of the 3 religious confessions?
The Vatican and Italy are of the same religious persuasion and, therefore, there is/was no inter-religious "conflict" between them. Jerusalem is now "home" to Judaism, Christianity, and Islam.
The city is considered holy and "central" by all parties.
What a mess!
Amado