Humanist
The territory thing is one of the toughest parts of the solution. There are all kinds of thoughts, some obvious some not so obvious.
The closer the territory issue solution follows ownership the less likelihood there is for discontent in the future. However ownership by itself is not enough because there is governement and church and evkaf land in the mix. So the population proportions are another guideline to ensure minimum resistance (feelings of unfairness) in the future, the 18-82 or there abouts proportions.
In addition there are military, economic, and political considerations to include in this, and not much of this was discussed during the Annan phase by anyone except the Turkish High Command who demanded delineation lines they considered defensible.
The one thought we must address is the possible future secession by one of the states from a federal structure. Having defined borders, legal personality, a national culture etc it will be much easier in the future for a breakaway state of a federation to claim recognition. It is a cynical thought but we have got to think of it and discuss it openly.
Also territory is not just land area, the length of coastline is a major factor too. As is the shape of each component state on the map, a Greek component state split in two by the Dekelia base is a situation proposed in ALL the Annan maps that accompanied the Plan. It is not wise to accept such a shape.
Sounds like a lot of talk on territory, but I believe that the fairer the territory settlement is perceived to be by the people the more likely it is to lead to a working compromise on the remaining issues like settlement, movement, ownership etc. So in my view it ranks close to the top.
Judging from past experience, essentially pre 1963 experience, the communities like to live in areas populated by their ethnic brothers. This is a natural impulse and in a federal system it will naturally arise (my opinion). So there will be areas in the south were Turkish Cypriots decide to settle as there will be areas in the north where Greek Cypriots do the same, applying the rights of settlement, ownership etc in a federal structure. However overall I believe the communities will start by living within the borders of their component states out of choice while they may have businesses etc in the other state. At some point there may also be a development along class or affluence lines, like rich people of both communities tending to congregate let us say in exclusive (and expensive) areas. Once the trends move from ethnic criteria to class and others we will know that the BBF is working!
These are thougths, not cast in stone or claimed to be the product of a wise and infallible intellect, so do not all jump on me at once!