First, thanks for an exceptional essay even by the standards of its author.
Of course, there is the further problem that too many Jews in Israel (especially on its political 'right') see themselves as being on the wrong end of the demographic trajectory to agree to a democratic single state.
Also, would it be wrong to say that among most Palestinians Islamic theology has supplanted any possible vision of a secular form of governance?
Perhaps the greatest irony of all is how similar society would look in a theocratic state based on either theology.