To many, including President Daniel arap Moi of Kenya, it is a logical and likely regional solution; to others, the very idea is ''iconoclastic and dangerous'' and a legal non-starter.
George Moose, the United States Under-Secretary of State for African Affairs, ignited the controversy on Friday when an Agence France Presse reporter asked him if the US was studying the possibility of creating separate ethnic homelands for Hutus and Tutsis.
"Sure we are doing it,'' the agency quoted Mr Moose as responding, ''and many other governments are also considering it."
A State Department official in Washington later insisted that Mr Moose, who was in Nairobi after visits to Rwanda and Burundi, "never made any such comments". The official attributed the AFP report to either a misquotation or a misunderstanding, adding that Mr Moose "said both Rwanda and Burundi were overpopulated. But any extrapolation beyond his comment is baseless".
While Mr Moose did not spell it out, that comment suggested to many that the homelands proposal could include taking some land from neighbouring countries. Any such conclusion, the official said, was "a bit of a reach; in fact, it's a false reach".
Still, Mr Moi, who met Mr Moose on Thursday, backed the idea as a way to stop the continuing violence in the volatile countries. "One way of solving the problem would be for all the Hutus to settle in Burundi and all the Tutsis in Rwanda, or vice-versa," he said on Friday.
One Western diplomat in Nairobi termed the idea "iconoclastic and dangerous" and stressed that it breached the African post-independence principle of the inviolability of borders established in colonial times.
Many diplomats in East Africa say they see the creation of separate territories as a "working hypothesis". But they are quick to add that they would never air such an explosive idea in public.
''If we ventured in that direction,'' one envoy told AFP, ''we would have to reshape the whole continent - and that would mean fire and blood for Africa."
Until the end of last week, the concept of separate territories was little more than a dream of ethnic extremists or a notion fostered by frustrated outsiders. But observers point out that East Africa has already seen breaches of the principle of inviolable borders, such as the creation of Eritrea.
More than 500,000 people were massacred by Hutu extremists during three months of genocidal civil war in Rwanda last year. Last weekend, an estimated 2,000 people were slaughtered in a refugee camp at Kibeho. Burundi has been plagued by similar turmoil and fears are increasing that the country could follow Rwanda down the path to genocide.