Recent events in Egypt have already provided Israelis with a number of invaluable lessons. The first was right there in the Bible the whole time (Prov 27:24 - nice play on words in Hebrew, by the way: 'h[o]sn[i] is not forever'), but there's nothing like a live demonstration to jog one's memory: a system based on oppression and privilege has a limited shelf-life. Even the most stoic of peoples will eventually rise up and demand their rights and dignity. To ignore this truth in the name of stability and security is like putting out a fire with gasoline. It's not just about human rights or international law. It's also a really lousy survival strategy.
The second lesson is that peace agreements signed with corrupt and corruptible elites, without seeking to resolve the underlying causes of the conflict are, in the long-term, a rather unsafe investment. The active corruption of Palestinian officials and creation of a (relatively) privileged Palestinian elite have been an integral part of the “peace” process, ever since Oslo. The result - as the leaked Palestine Papers have shown - has been a Palestinian leadership capable of signing almost anything. But even if Israeli leaders were actually interested in a deal, what would such a deal be worth, without popular support, “ratified” by brute force?
The third and possibly most important lesson - certainly the most shocking for many - is that Arabs are people too. They don't like being oppressed any more than you or me, and they are perfectly capable of rationally and heroically pursuing their goals, without any atavistic bloodlust or uncontrollable desire for revenge. The remarkable behaviour of the movement and crowds in Tahrir Square and throughout Egypt offer some indication of how Palestinians might go about building a single state, two states or a federation with Jewish Israelis once their democratic rights and fundamental humanity have been recognised.
A fourth and final lesson (for honours students only, I'm afraid) is that there is a limit to how much one can expect others - millions and tens of millions of others - to pay, in order to assuage one's own fears and sustain one's own unsustainable way of life.