How much longer are we going to cling to the idea that if the United States doesn't unilaterally and unconditionally support one very particular "western-style democracy" in the Middle East, the whole region will erupt in flames and Israel will be wiped off the map? The history of this argument is predicated on the fact that Israel has already survived full-scale invasion several times in the past, and is stronger militarily now than they've ever been. Arab Spring or not, all of the countries bordering Israel know they have to have workable relationships with the US for their economies to survive, and no government but Syria has even rhetorically entertained the idea of launching a war with Israel for a generation. Heck, for what it's worth, I wouldn't wish Israel's style of democracy on any of these newly emerging governments.
Yes, Israel fought a war in Lebanon because of Hezbollah, but that's going to be a factor no matter the situation. For as long as Israel exists, there will be radical militant groups trying to do it harm - but as long as that isn't going to change anyway, Israel might as well do right (for the first time) by the other 95% of Palestinians and give them a state where the IDF won't kick them around quite as often. Rest assured that any settlement that allowed for an autonomous Palestinian state would include a very solid agreement about Israel's ability to retaliate against non-government forces in the country. And if a new Palestinian government doesn't hold up their end of the bargain, well, welcome to the exact same situation as today, but said government will no one to blame anymore but itself.
I don't know why the Sunni-Shi'a divide would even need be mentioned, since that has nothing to do with Israel, unless the suggestion is that Israel provides a magnet for Middle Eastern tension so a different conflict doesn't erupt. Which isn't much of an argument for anything. Besides, the only time a serious conflict broke out in the 20th century between countries along that religious divide was Iraq and Iran, and that was less a war over religion as a war over insanity. Not to mention a war the United States had a pretty big hand in starting and fueling, because we as always thought it was our decision what kind of countries were the "right" ones for the region.