That would be the end of Israel as a functioning state (Jewish or not)
You really think a country can double it's population overnight bringing even more division without it crumbling? You'll just end up with another Lebanon.
A two state solution is the only thing that can make sense short/medium term. Longer term after decades of peace you can open the borders and create perhaps a union of sort.
A one state solution is detached - it's just not a viable option, and even if you believe it's the right thing to do it just doesn't seem wise.
A single state solution is the only long term solution. Unless we accept that ethnostates are good for everyone. Israel will have a hard time bringing in the Palestinians, but the US created reservations and the native American population isn't trying to kill everyone else. Israel needs to learn by doing it that diversity is their strength.
Prosperity can do a lot towards killing the shared stories that cause people to want to go kill the people in the neighboring country. Grandpa's story about losing his home won't be as stirring when you're not being bombed and starved by the same group of people who stole Grandpa's home. Especially when they give back Grandpa's home.
I'm all for prosperity, which is why I think trying to merge two cultures over overnight will just result in chaos and violence. Especially since the groups are around the same size and the territory is tiny - if you actually think about the practically of such a solution you'll realize it's not viable.
Do you really think the new nation wouldn't just delve into chaos Lebanon style? Might as well just sentence everyone to eternal conflict.
How is starting with two states and later on creating a union type entity not better for everyone?
Let's say you had to approach this as an engineering problem of merging two very different branches/companies/etc, how would you approach it?
And re US, they basically committed genocide and ended up absorbing a minority, the situation in Israel is different as it's similar sized populations on a fraction of the land.
They could form a state with equal rights, including right of return, for Jews and Palestinians.