Again, the conventional wisdom is to carve up the only plural democracy with respect for fundamental human rights and give the Palestinians a self-governing state. Recipe for terror, war, and even more regional instability. Maybe Islamic Jihad will be pacified by giving up the settlements!
Nobody is talking about "carving up" Israel. It is not on the agenda.
You are forgetting that the territory of the presumed Palestinian state has never been part of that democracy. Israel controls it, but does so outside of its own democratic system. Palestinians have neither the voting rights within the Israeli polity, nor equal protection in front of the law (as, of course, distinct from the Israeli Arabs). In parts of the West Bank not already under effective Palestinian control, it is a military government, at least as far as the native population is concerned. Of course, both Gaza and some chunks of the West Bank no longer even have Israeli military government: they are under Palestinian civil control, with Israel retaining only the control over the external perimeter.
And, of course, most Israelis are strongly opposed to incoroporating Palestinians into their democratic polity. Had Israel offerred citizenship to the population of the territory in question, there would have been something to dicuss. As it is, no such offer is on the table. So, the choice is, letting Israel continue running the show as it has always done - that is without practicing either democracy or respect of fundamental rights - or have somebody else take the responsibility.
