> Legal separation of Church and State and equal rights for all is not inconsistent with Israel being a Jewish state.

Of course. Israel in practice is a democratic, (mostly) secular, (de facto) multiethnic state with the Jewish ethnos as its basis. In these particulars it is no different from, say, most Western European national states. In this sense Israel should stay a Jewish state - this is absolutely compatible with demographic realities and whatnot.

But the less state religion - the better. No clerics should be employed by the state on the taxpayers’ shekel (esp. extremist clerics), there should be a civil marriage procedure, etc.

All that said, Israel is light years away from its neighbors.