At the same time, if they could manage the natives, either by assimilation or less suitable means, they would be on an island, meaning this Isreal, even if it did have to deal with a Palistinian-like issue with the natives, would not share borders that want to see them destroyed. That alone would change the Isreali national identidy a bit, don't you think?
Don't think they'd take the whole island: there were over 4 million inhabitants OTL by 1950 (a time when OTL Israel, IIRC, had less than 2 million) - too many to manage except as a South-Africa type regime, and I doubt the Jews would want that. So I expect they'd be sharing borders with _one_ country that would like to see them destroyed, or at least not liking them much.
Bruce