The Heights, Al A'araf, is mentioned in Qur'an and Hadith. Will it serve as a permanent abode in the hereafter for those who deserved neither paradise nor hell?
The Qur'an mentions "the heights" (a'raf) in the world of the hereafter:
"And between the two there shall be a veil, and on the heights there shall be men who know all by their marks, and they shall call out to the dwellers of the garden: Peace be on you; they shall not have yet entered it, though they hope. [...] And the dwellers of the heights shall call out to men whom they will recognize by their marks, saying: Of no avail were to you your amassing and your behaving haughtily: Are these they about whom you swore that Allah will not bestow mercy on them? Enter the garden; you shall have no fear, nor shall you grieve." (7:46, 48-49)
However, the Qur'an does not specify what "the heights" are or which men are on it. Therefore, scholars and commentators have advanced a number of viewpoints. Narrations also vary somewhat.
In the Twelver Shi'i tradition, one of the most common views is that the men on the heights are the Prophet (S) and the Imams (A). Those who are in harmony with them many enter Paradise, but no one can enter Paradise if they are hostile to or rejected by them.
Some commentators (Sunni and Shi'i) have also put forward the view that it is a holding place for people who deserve neither paradise nor hell (for instance, they have equal good and bad deeds; they did not have religious responsibility due to dying young, mental illness, or never hearing the call to God), and whose judgment is delayed, so they await their final judgment there. This also appears in narrations. Some have also suggested they await the intercession of the Prophet and Imams there.
Other views have also been advanced.
That said, the word a'raf carries the connotation of "knowing" (such as in the word 'arif used for a mystic), and it does lend the sense that the people on the a'raf might also be imbued with special knowledge and insight. The ayat also suggest they have a special form of knowledge, since they recognize people by their marks, even though many things will be made clear to all people in the hereafter. This supports the idea that the men on their heights are the Prophet and Imams; or, at least, people with a sharp spiritual knowledge.
Perhaps several of these views are correct. God knows best.