Of course recognizing Israel as a Jewish state ends the right of return myth for which Israel is under no legal obligations to grant because UNGAR 194 is nothing more than a glorified suggestion which Israel had the legal right to reject. It is also important to ensure the arabs accept that any state they are granted through NEGOTIATION ( not going it alone in the UN ). Two states will not be stage 1 to a single arab state which would replace Israel. Both Fatah & Hamas have said many times in the past that 2 states is the first stage in the battle to liberate all of Palestine. If the arabs are forced to say Israel within the negotiated border is a Jewish state then the arabs are saying we have no claim to that land because we agree it belongs to the Jews not us. If they don't recognise Israel as a Jewish state we can't have peace we will just have a hudna which is what Hamas have offered until the day when the arabs are ready to fight to try and get more land. This is about much more than petty politics for Israel insisting the arabs recognize it as a Jewish state. Beggers can't be chosers so the arabs are going to have to accept Israel's terms if they want anything.
Syrian group says Nusra abducts its leader, in blow to U.S. plan (Reuters)
from the article: Why Palestinians can't recognize a 'Jewish state'