I think you're wrong about that. If Israel insists that the conflict will only be resolved when one of the sides is no more, then that side will be Israel.

I don't agree that Israel's very existence is in play because it has independent nuclear capabilities, but the Zionist answer to the Palestinians is to persuade Lebanon, Jordan, Syria, Egypt etc. to absorb them perhaps in exchange for Sheeba farms, Golan Heights, the Gaza Strip and other "incentives" which an increasingly prosperous Israel can provide together with its remaining friends.

The sad fact is that the Saudis etc. care no more for the Palestinians than the Israelis do and might be persuaded by the US to help fund such a deal.  As part of a final settlement Israel may agree to absorb the west bank population but with no right of return for Gaza and all the other Palestinians in neighbouring countries and refugee camps.  

That should keep Israelis in the majority overall especially with continuing immigration of Jews.  They have already successfully absorbed a c. 20% Palestinian population and they have been quite docile despite being a disadvantaged minority.

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