I think not. For one thing, the prospects of a comprehensive settlement right now are still pretty dim. President Bush’s recent interest in the conflict notwithstanding, both Israeli Prime Minister Ehud Olmert and Palestinian President Mahmoud Abbas are politically weak, making it exceedingly difficult for either to agree to any serious compromises. Since serious compromises are a prerequisite for any comprehensive settlement, their political weakness suggests lasting peace is still a ways off. Mugniyah’s death will not change the fundamtenal dynamic.
Above that, Hezbollah’s popular support is confined, mainly, to Lebanon (and to Palestinians living there) and the assassination of a top Hezbollah leader is unlikely to spark large-scale popular anger in the West Bank. Furthermore, since it is unclear if Israel had anything to do with the killing (Mugniyah had plenty of enemies), blame will be hard to assign.
Overall, I’d say that the assassination of Imad Mugniyah will have little to no effect on the state of the Israeli-Palestinian conflict nor on any current efforts to bring that conflict to a close.