Walt summarizes the contrasting positions this way:
My basic take is that Netanyahu's view and Obama's view are essentially mirror-images of each other. Netanyahu says Iran is an "existential" threat to Israel, while he sees the Palestinians as just a problem to be managed. So he wants Iran's nuclear program ended, and by force if necessary, while the peace process drags on interminably. By contrast, Obama sees Iran as a problem to be managed through patient diplomacy, but he thinks the Palestinian issue is the real existential threat to Israel's future (and a continued liability for U.S. strategic interests). He'd like to put that one to rest ASAP, except that he's been forced to back down every time he's tried and he knows he can't say much about it between now and November.
Mearsheimer and Walt write of the Palestinian issue:
The gulf between Washington and Jerusalem is just as wide on the Palestinian issue. Mr Netanyahu opposed the 1993 Oslo accords, which sought to resolve the conflict and establish Palestinian self-rule. The only "state" he would countenance today is a set of disconnected and disarmed enclaves under de facto Israeli control. He was elected in 2009 on a platform rejecting Palestinian statehood, and his cabinet is populated with politicians who want to control the West Bank forever. His government continues to expel Palestinians from their homes in Jerusalem and the West Bank, and to expand Israeli settlements there.
By contrast, Mr Obama is committed to helping create a viable Palestinian state living alongside Israel in peace. As he said in Cairo in June 2009, a two-state solution is “in Israel’s interest, Palestine’s interest, America’s interest, and the world’s interest”. He knows the combination of US support for Israel and Israel’s treatment of the Palestinians fuels anti-Americanism throughout the Arab and Islamic world, and contributes to the global terrorism problem.
In fact, the Palestinian issue is the real existential threat to Israel. More than 500,000 Israeli Jews now live in the occupied territories, and continued settlement building will lead to a single state between the Jordan river and the Mediterranean sea. Given demographic trends, this “Greater Israel” could not be both a Jewish state and a full democracy. Instead, it would be an apartheid state, threatening Israel’s legitimacy and long-term survival. As Ehud Olmert, former prime minister, said in 2007, if the two-state solution fails, Israel "will face a South African-like struggle for equal voting rights". And if that happens, he warned, "the state of Israel is finished". [my emphasis]
More accurately, the state of Israel as a Jewish state will be finished. It can still be a democratic state with freedom of religion, depending on how the transition occurs.
Surprises can certainly happen, but it seems to me that the possibility for a two-state solution has approached the vanishing point.
Glenn Greenwald in Obama, Iran and preventive warSalon 03/05/2012 agrees that in his speech to AIPAC on Sunday, "part of what Obama was doing was denying Netanyahu’s demands that the American 'red line' be moved to where the Israeli 'red line' is." But he also notes that Obama was definitely threatening preventive war, which is illegal in international law, and illegal for very good reasons. Speaking of Obama's threats against Iran in his AIPAC speech, he writes:
Is that not the classic case of a "preventive" war (as opposed to a "preemptive" war), once unanimously scorned by progressives as "radical" and immoral when the Bush administration and its leading supporters formally adopted it as official national security doctrine in 2002? Back in 2010, Newsweek‘s Michael Hirsh documented the stark, fundamental similarities between the war theories formally adopted by both administrations in their national security strategies, but here we have the Bush administration’s most controversial war theory explicitly embraced: that the U.S. has the right not only to attack another country in order to preempt an imminent attack (pre-emptive war), but even to prevent some future, speculative threat (preventive war). Indeed, this was precisely the formulation George Bush invoked for years when asked about Iran. This theory of preventive war continues to be viewed around the world as patently illegal — Brazil’s Foreign Affairs Minister last week said of the "all-options-on-the-table" formulation for Iran: some of those options "are contrary to international law" — and before 2009, the notion of "preventive war" was universally scorned by progressives.
Again, one can find justifications, even rational ones, for President Obama’s inflexible commitment of a military attack on Iran: particularly, that this vow is necessary to stop the Israelis from attacking now (though it certainly seems that the U.S. would have ample leverage to prevent an Israeli attack if it really wanted to without commiting [sic] itself to a future attack on Iran). And I've noted many times that I believe that the Obama administration — whether for political and/or strategic reasons — does seem genuinely to want to avoid a war with Iran, at least for now. [my emphasis]