If there's one thing that unites all the populations in Jerusalem it's hostility to gay people. This dislike is not something I like, it's not something I support - however, in a democratic society that is what people think and feel. Having a gay pride march through an orthodox area of the city, would be similar to a march of extreme right-wingers through an arab village. It would be provocative and undoutbedly lead to violence. There is no "right" to march or to demonstrate in Israel: it depends on consensus. In this case, the outrage and the impact on people's lives (ie the injuries that would result) just don't lead me to believe there is a consensus or support for this.
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from the article: Jerusalem Police reject Gay Pride parade route