You are neglecting to mention the possible third outcome.
A NewState in Gaza/N.sinai that fulfils the aspirations and deams of Palestinians worldwide to build and develop their own Nation in statu ascendi.
By the way, you must be aware that Israel RIGHT NOW is under strong economic and diplomatic sanctions. We have few friends and the UN is useless. Insurance companies are prohibiting the transit of their clients' aircraft, ships, trains (just kidding, Israel has no international rail nor road access to the North, South, East or West!)
Did you see the demonstration a few days ago in Washington DC?
What did the signs say?
Did even ONE sign say "Peace" (it's just one word, not too complicated)
Nope. I looked very closely, and there wasn't even a little sign with the well-known symbol.
This entire fiasco has become a duel of displaying dead kids' images, and trying to gain sympathy about whose dead kids should be considered more important?
Next week, in DC, the Jewish community will attempt to garner a massive crowd (11/14) and honestly, they are fully entitled to express their views by assembling, but the organizers had better be careful.
All it takes are 3 or 4 radical islamists to turn that day into a bloodbath (See: April 15, 2013 Boston)