They need to keep their Judaism, an undivided Jerusalem, and remain democratic.
Which is of course impossible. Judaism and democracy will quickly become incompatible as the Arab population overtakes the Jewish one.
you know, back in the 60s it was forecast that the Arab population would overtake the Jewish population by 1990. The Jewish population has kept growing in part due to immigration, but it's also useful to remember that the most fertile groups in Israel (even more so than Arabs) are ultra-Orthodox and Ethiopian Jews, and that the
desired family size for Jews and Arabs is about the same.
I went with option 2 because Israel will have to give up Gaza and the West Bank, and probably Galilee later on, at some point.