Countries usually create their own identities via ethnic groups, religious groups, languages, laws, politics and via a variety of other elements. Let Israel call itself (or consider itself) as it wants. There are so many ways for any country to identify itself. It is not relevant how the outside labels the country. The fact that there may be Israelis who will never accept a Palestinian State (or Islam or an Islamic state) does not "delegitimize" the existence of a Palestinian state. Those are opinions. Even as individuals, we do not (or should not) create ourselves to suit another's perception. Others perceive us as we have created ourselves. What Israel wants to be seen as, or called, or referred to as, is the choice of the nation of Israel. This argument of what people should "call" Israel or "perceive" Israel as is not relevant to Palestinian statehood at all. Israel does not need to ask permission to call itself (or create itself) as it chooses. It has been a state for 50+ years and it never asked permission from the Palestinians for the State of Israel, so why should this need to be addressed this now? Because there is no philosophical answer to the question of how Israel can be defined. This can be debated into perpetuity, all the while Israel's borders and settlements are expanding. The name game is simply a stall tactic.
Los Angeles City Council votes to pursue bid for 2024 Summer Olympics (Reuters)