The point being made, and verified by the actual transcript is that the quote is out of context. Rice was not saying this as her own opinion, but rather speaking of what others are saying:
The other thing is, just to close off this question, the question has been put repeatedly to the Israelis and to us that it cannot be Gaza only and everybody says no, it cannot be Gaza only.
So far, so good. Jewish Current Issues nailed the Times on this point.
But even granted that the Times messed up the quote, the fact remains that right afterwards, Rice says:
There is, after all, even a link to the West Bank and the four settlements that are going to be dismantled in the West Bank. Everybody, I believe, understands that what we're trying to do is to create momentum toward reenergizing the roadmap and through that momentum toward the eventual establishment of a Palestinian state.
And right before the 'Gaza only' comment, Rice said:
Let's see, you know, what's required. We will have a Quartet in New York because the world comes here for the UNGA. And we'll certainly have a Quartet meeting at that time. There's a Quartet envoys meeting that's scheduled for this week and part of their job is to kind of prepare the meeting of the Quartet and I think we'll look at where we are. But by no means do I think that this is the end.
Daniel Pipes calls the 'Gaza only' quote, " a massive distortion of her words and meaning." He quotes Alex Safian of CAMERA, who admits that
Yes, she expresses the US position in favor of the Roadmap and the "the eventual establishment of a Palestinian state," but that's a far cry from immediate pressure on Israel to go beyond the Gaza withdrawal, which is what "It cannot be Gaza only" clearly means in this context.
At this point, I think we are just splitting hairs. We are dealing with the context of a press conference, not a prepared statement; you can only go with the gist of statements--and the history of pressure that the US in general and Rice in particular has exerted on Israel. Besides, what difference does it make if the pressure on Israel to give more territory to the Palestinian Arabs is going to be 'eventual' or sooner?
It just seems to me that despite the Times misquote, Rice is basically implying what the quote attributed to her says.
The misquote is fake, but accurate.
UPDATE:
Jewish Current Issues has more on this and the followup here and here
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