Of course you are stating a false dichotomy; you asking proposing there are only two choices, two states or incorporate the Arabs into Israel, but there is at least one more choice, continue with the status quo. In other words, we already have the final outcome. It may not be as pretty as you would like, but since no other outcome is possible, it is the final outcome.
No, I am not insisting there are only two choices. I suggested one choice and ASKED you what you thought the final outcome will be. (Also see all the pinned threads up top and my contributions. All sorts of ideas there.)
I am open to all sorts of choices here, including some sort of "status quo". Personally, I think the status quo is sustainable for a bit longer, but not indefinitely. Events, driven by people, are likely to overtake the status quo. Its easy to see the ways in which it is already.
Gaza, pushing for re-entry into Israel, rather than "end the blockade". That is a shift.
Israel pushing for further Jewish settlement and annexations. That is a shift.
US encouraging recognition of Israel and settlements. That is a shift.
Israelis demanding a stronger response to Gaza's rockets and violence. Shift.
Iran. Shift.