I'm sticking with totally insane. You have created a system of mutual predators, each unable to kill enough to remove the threat, and each new death is incentive to continue.
The problem is there's nothing better available at present.
The eternal argument for 1967 borders is nonsense. There wasn't peace when that was the border, there won't be peace if it were made the border now. The Palestinians have adopted a strategy of trying to take whatever they can by negotiation but not giving up fighting. They'll take the 67 borders and continue to fight. Most Israelis understand this by now, hence the lack of interest in peace. Getting an Israeli interested in peace is about like getting a scientist interested in a perpetual motion machine.
You seem to have an inside source with the Palestinians and the Israelis and a crystal ball.
I do concede that Israel is not interested in peace, since they decline to do the one thing which could lead to peace, and since 1967, made it impossible to pursue peace. Then they blame the Palestinians for fighting, even though this is what they want the Palestinians to do.
I'm going with "totally insane."
Remind me again what benefits the US gets from our alliance with Israel, and what we get for the very large amount of money we give them.