Up until very recently Israel showed a steady increase in Jewish radicalism. It increasingly looked like many Israeli's prefer the present situation as it gives them an excuse to steal yet more Palestinian land.
The revolt in Egypt may become a turning point. As the Muslim Brother put the peace treaty with Israel into question the Israeli's once again realize that they are a few million Jews amidst a see of Arabs. In the short term they can rely on their technological and military superiority to survive but it is rather foolish to assume that that situation will remain forever.
Israel had forgotten for a few moments that behind those few million Palestinians are a few hundred million Arabs. Those Arabs are not exactly loyal allies for the Palestinians. But just a bit of loyalty at the right time can be enough to make real trouble for Israel.