Whether it'll be a one-state or a two-state solution is going to be entirely up to Israel, but in the long term they cannot afford to maintain a permanent state of low-grade civil war. Eventually, Israeli mainstream opinion is going to realise this, or have it dictated to them by the outside world, and tell the extremists to take a long walk off a short pier.

I wish I could be quite so optimistic.  I think the civil war option is precisely what "mainstream" opinion has adopted because it allows them to grind the Palestinians into dust and gradually realise the dream of a Greater Israel.  Everything less that that is tactics and gameplaying for the optics to be seen as being "reasonable".  The risks and costs of the conflict, for Israel, are currently less than the potential gains because of Israel's overwhelming military superiority which is the one thing that will never be ceded - even if Iran has to be nuked into the dust to ensure its continuance.

There isn't really a civil war going on here.  Its a slow policy of ethnic cleansing and genocide.  The Palestinian people will be extinguished and a deal made for Jordan, Lebanon and Egypt to absorb the leftovers.  Israel will have succeeded with the Palestinian people where Hitler failed - one of the cruelest ironies of history.

"It's a mystery to me - the game commences, For the usual fee - plus expenses, Confidential information - it's in my diary..."