ABC News reports:

Israel, fearing it will be blamed for any further deterioration in Arafat’s condition, said Thursday it is ready to lift its travel ban and allow Arafat to leave.

…

Israeli Foreign Minister Silvan Shalom said a Palestinian Authority without Arafat could become a partner for peace. “We always said we would be willing to talk to a Palestinian leadership that would be willing once and for all to bring an end to the bloodshed,” Shalom told Israel Radio.

Good news all the way around as near as I can tell.