given population differences alone and presumed voting along established political (ie religious) lines, you’d end up with a Jewish/Israeli government rather than a Muslim/Arab government.

You'd end up with a government with both groups. It'd be possible to, for example, have a large Arab party in a coalition government with a left-wing Jewish coalition. And also someone like Netanyahu would've never won; because Palestinians would all rally around someone else.

This is especially true in a parliamentary government like Israel; the Knesset would look much different if the Palestinian population suddenly tripled.