Special United States envoy Sol Linowitz is setting the pace and style of the three-sided marathon talks on Palestinian autonomy under way in this tranquil seaside resort. But Israel appears to be determining the parameters of the negotiations. Mr. Linowitz's preferences for bilateral discussions and for minimal public disclosure are being respected by his counterparts, Israeli Interior Minister Yosef Burg and Egyptian Prime Minister Mustafa Khalil. The negotiating schedule calls for an almost daily routine through May 8, after which the talks resume in Egypt until the May 26 target date for an autonomy agreement. But the so-called four points of Israel's Prime Minister Menacham Begin pose the main challenge to the marathon's participants. According to his media adviser, Dan Pattir, these points assure the establishment of "functional" Palestinian administration rather than laying the foundation for a Palestinian state: 1. Jewish settlement projects would continue during the initial five-year running-in period. Existing settlements would be subject to Israeli law only. 2. Jerusalem's Arab quarters would not be included in the autonomy nor would their residents be allowed to vote in the elections for the self-governing authority's administrative council or other institutions. 3. The autonomous administration would not be granted legislative or judicial powers. 4. All matters affecting military security would be the sole prerogative of Israel. However, a senior Israeli political source cited three areas in which Israel's position might be softened: a settlement freeze (unannounced, but effective) at least for the marathon's duration; allowing the autonomy institutions a say on security or military matters; and granting Arab Jerusalemites the right to vote in the autonomy without incorporating any part of the city within its geographical limits.