To put things in context, more Jews have been killed in the Arab-Israeli conflict than were killed by Muslims over the past 1300 years (excluding, perhaps, Jews killed in Medinah when Islam started – though the facts there are dubious since little is known about pre-Islamic Jewish communities in Arabia).
The Muslims don’t want some territory, they want all the territory. To them, Tel Aviv is just as much a settlement as Alon Shevut. They want to be able to go anywhere in Eretz Yisrael and not be in a foreign country. Zionists can never agree to that. Hareidim only care for autonomy, so in theory you could have a Hareidi-led yishuv making peace.
Given the Israel is a very secular state, whose behavior in terms of even the seven mitsvos is quite deficient, I wouldn’t count on a miracle saving them. To know what to expect, reading the beginning of Yeshayah describing similar conditions at the end of the period of the first Bayis.