Zvi Barel said in an opinion piece published on Thursday that the plan also aimed to see Dahlan replace the Palestinian Authority's Mahmoud Abbas and the Fatah movement - the ruling party in the occupied West Bank - and the Palestinian Liberation Organisation (PLO).
He said it was "too early to assess whether this plan will be fully implemented" as the Hamas movement, which rules Gaza, could reject Dahlan, who used to head the PA's security services in Gaza.
But if successful, according to Barel, Egypt would ease the siege of Gaza by opening the Rafah border crossing and the UAE would fund a power station on the Egyptian side of the border.
A "state of Gaza" could become a reality with Dahlan at its head, something that, for Israeli Prime Minister Benjamin Netanyahu's government is "the plan's key", he said.
The plan aims to "neutralise" the role of Qatar and Turkey in Gaza, according to Barel.
But he warns that the Dahlan plan could also see Gaza severed from the West Bank, "especially given the long feud between Abbas and Dahlan".
Dahlan was expelled from Fatah's ruling body in 2011 on allegations of plotting to overthrow Abbas. He has been living in exile in the UAE since 2012.
He lacks popularity among Palestinians.
Abbas has dismissed the secretary general of the PLO and his effective number two, Yasser Abed Rabbo, over links to Dahlan.