BETHLEHEM, West Bank -- Nine young Palestinians, wearing masks against the stench, emerged from the Church of the Nativity on Thursday carrying the rotting corpses of two Palestinian policemen in makeshift wooden coffins.

It was a small breakthrough in the three-week standoff at one of Christianity's holiest shrines, where 30 gunmen are among more than 200 Palestinians holed up and surrounded by Israeli troops.

In nearby Ramallah, where Israeli troops are just outside the door of Yasser Arafat's offices, the Palestinians inside announced a court run by a judge and lawyers with little or no legal experience had convicted four Palestinians for the murder of an Israeli Cabinet minister. The proceedings were clearly intended to help bring an end to the Israeli siege.

At the United Nations, meanwhile, U.N. officials responded to an Israeli demand by adding two additional military officers to a U.N. fact-finding mission that will look into the Israeli assault on the Jenin refugee camp.

In Texas, President Bush met at his ranch with Saudi Crown Prince Abdullah, who warned that the U.S. backing of Israel had damaged prospects for Mideast peace. However, Bush said he formed a personal bond with Abdullah, adding that the crown prince promised not to "use oil as a weapon" to show Arab anger over the Israeli situation.

Seven Palestinians killed

Seven Palestinians were reported killed in various incidents in the West Bank and Gaza Strip. In the latest death, Palestinians said a woman was shot and killed by Israeli forces early today near the Gaza-Egypt border.

The Israeli military said Palestinians attacked Israeli soldiers with gunfire, grenades and a mortar shell in a battle that lasted for several hours.

But developments surrounding the confrontations in Bethlehem and Ramallah marked the most substantial progress in days, if not weeks, though both sides remained at odds on core issues.

Israel wants to arrest or deport the gunmen in the Church of the Nativity and demands custody of the men convicted of killing Tourism Minister Rehavam Zeevi last October.

Israeli Prime Minister Ariel Sharon was considering allowing Arafat to leave his shattered West Bank headquarters for Gaza if the Palestinian leader agrees to use his intact security force in the southern Palestinian enclave to crack down on militants there. Sharon aide Danny Ayalon said the offer had not been proposed formally to Arafat.

In Bethlehem, nine young Palestinians, ages 14 to 20, deposited the two bodies, which had been decomposing inside the church since early in the standoff, in Manger Square. Israeli soldiers inspected the remains, which were taken away by a Palestinian ambulance. Israeli soldiers threw smoke bombs to block the view of journalists. Israeli authorities immediately took the nine for questioning.

"These are not among the group of wanted gunmen," said army spokesman Capt. Jacob Dallal. "Now they're being fed. The army is providing them with food and water."

The youths entered the church looking for relatives or friends shortly after the standoff began April 2, Palestinians said.