2. No. it's completely unrealistic. How do you propose to make a functional nation state out of this?
You can't. Sadly, looking at the demographics on that map is also the reason the one-state solution will never exist either. There would be equal number of Jews and Muslims in Israel and Israel would never accept it.
They will continue the apartheid and land theft until Palestinians leave on their own accord.
I agree that the situation is much like South Africa and change will only take place when western nations get tough on Israel. I don't see that happening any time soon though.
They've stood by this far, I don't see what Israel could possibly do that's worse.