Western democracies should not be friendly allies with ethnostates, as it goes against a fundemental basis of modern western democracy.
The fundamental basis of modern Western democracy is Westphalian sovereignty with nations stapled onto it when the monarchies began to be toppled. The former established territorial integrity and sovereignty, and the latter established self-determination through commonly shared experiences (one might say history and culture, which some may call ethnicity). Before that there were just kings faffing about doing whatever they wanted, and serfs who kept the throne clean for the next ass that would own them.
There's more to Western democracy than just living on the land, and it's more self-evident in Europe than in the Americas through the jus sanguinis principle. Being born on the eastern shores of the Atlantic generally does not confer citizenship. Naturalization used to require more than simple economic integration, and some form of cultural integration (some may say assimilation) is increasingly being brought back following the migrant crises. We used to—and are reverting back towards—not treating citizenship as just a piece of paper. Becoming citizen is going back towards being a commitment here, rather than a box you tick at the magistrate, as exemplified in say Finland where citizens don't just get rights but also have citizen-only obligations, one of which is the duty to provide for the defense of the country (Constitution of Finland § 127). Compare that to the American Selective Service and draft which apply to citizens
and residents.
And on that note, "The right to exercise national self-determination in the State of Israel is unique to the Jewish people" is no more different than saying mere residency doesn't grant you a national vote, which is extremely common in modern Western democracies. Given that only minority Druze and Circassians are the only non-Jewish peoples with mandatory conscription,
and Israel was founded as a Jewish homeland, this would be no more controversial than say "only Dutch citizens may vote in Dutch national elections in the Netherlands" even if a non-citizen has roots in the Netherlands going back centuries. They would still be entitled to a nationality and thus be a subject to
a state, as per the UDHR Article 15, but that is technically not the same as citizenship (e.g. American Samoans are US nationals, but not citizens). Even considering the Druze and the Circassians, the US seems perfectly fine drafting non-citizen residents.
However, the inevitable question rises concerning national minorities: do they have self-determinism? Do they get their own country? Should there be an independent Sápmi in northern Scandinavia? Here is where the backbone of the Westphalian system still remains: territorial integrity. There's a reason why unilateral secession is frowned upon, and only accepted in remedial form—why Kosovo is accepted but Catalonia isn't (Spain's own fears notwithstanding) etc. Modern Western democracies, under the Westphalian system, hold onto territorial integrity until the situation becomes irreversibly irreconcilable, where remedial unilateral secession is the only option left. Without it, we'd just be a bunch of elected monarchies (or cryptomonarchies like Russia) faffing about again.
Thus ultimately, what some may call "ethnostates" do not go against the fundamental basis of modern Western democracies. The influx of cosmopolitanism is a recent occurrence and does not reflect the basis of modern Western democracies.