The real problem is that there are two different concepts of nationhood. The most popular one is that a nation should represent an ethnically homogeneous group--one language and culture predominates. You're in the club or you're out. The other concept is one that tolerates ethnic and cultural diversity where anyone willing to play by the rules is allowed into the club as an equal. Israel was conceived as an ethnically homogeneous club, and most Israelis don't want that to change. The two-state solution maintains the ethnically pure concept, even though Israelis are still basically of the same culture as Palestinian Muslims. The one-state solution follows the concept of tolerance for diversity, but the Jewish population would lose its dominance and control.
Except tolerance for diversity only works if the people tolerate diversity. A one-state solution produces a diverse society in which most people will not tolerate the diversity.
Yes, I grew up in such a society in the 1950s and 1960s, so I know what you are talking about. The narrative from those who opposed diversity was that integration was impossible, couldn't possibly work, and would never be accepted. The fact is that they weren't totally wrong. There are still people out there who can't accept that it wasn't the end of the world when some of those barriers to integration were removed.
In the case of Israel, the Jewish population will survive even in the face of becoming a very large minority of the population. Most people do, in fact, end up tolerating diversity quite nicely. Those of us who have lived in NYC--the most diverse population in the country--have discovered that it is really possible for very diverse peoples and cultures to live side by side in peace, counterintuitive as that may seem to you. In fact, a lot of Jews live in that city side by side with Muslims, Hindus, Christians, atheists, etc. It could happen even in an integrated Israel, crazy as that must seem. After all, 20% of the population of Israel already consists of Palestinians. But most Palestinian Arabs want the same thing that Israeli Jews do--peace and prosperity. They just have to learn to stop killing each other to get it.