Should I find the time sometime soon, perhaps I'll try to sum up the issues Netanyahu raised in his speech yesterday, the responses to them, and the significance of them all. Here, however, a quick comment about the Jewish State requirement.
The entire Israel-Palestine conflict stems from the tragic reality of two peoples with legitimate claims to one small land. For the Jews, it's their ancestral homeland. For the Palestinians, it's the land they lived in when they first began developing a national identity. Since neither side is going to relinquish their claim, the only resolution to the conflict will be when both accept that the claims of the other are legitimate, and both accept partition.
If Israel is not allowed to define itself as the homeland of the Jews, what's the purpose of the entire effort? French, Angolan or Argentinian claims to the homeland of the Palestinians would be baseless and illegitimate; the reason the Israeli's claim is legitimate is that they're Jews.