What if some Arab country did a peace gesture and offered to extend citizenship to the Israelis. That could be done in a way to say, we really love those Israelis and we do not want to harm them, we just want them to become like us.
Israels will accept or refuse, but the gesture would be some PR stunt about good wills. The Israelis would then look bad, they are the ones who refuse to be part of the region, not the other way around. Most Israelis hold a second citizenship at the moment, mostly European and American citizenship.
So say now an Israeli is killed--I do not want anyone to lose their lives, the news will report a Saudi has gotten killed today and no one would lift a finger. It's just another dead Arab, it won't make the news. We know that Israel does not want to give its citizenship to the Palestinian, you can be sure of that. So the Palestinian cannot get sympathy if his/her death was reported as an "Israeli dies" headline.
Arabs believe that the death of Arab means little to super powers of the world, they frankly don't care about a dead Arab. Israel can kill a million Arab and France, UK, and the US will look the other way. Of course there people get away with killing Arabs every chance they can--sure they try not to do it, it's bad for business.
I think we should try this approach, this has nothing to do with religion, it's about changing the rules of the game without anybody eliminating the other. If you are building walls, they can keep you in as well as keep folks out. I say give the Israelis a citizenship of some other Arab country--I am sure Oman would be happy to print extra passports in an effort to get people to know that they actually exist.
P.S. this is not a call or endorsement of violence, it only begets violence.