How do you define efficiency? If you expand the definition of a foreign agent under FARA dramatically, then wouldn't it probably mean expanding the bureaucracy a lot too?
But then, since most of them aren't agents of the foreign government, they would probably be much more likely to renounce citizenship.
Efficiency by some standards would be hindered by going to a lot of expense to decrease tax revenue.
Do you want people with dual US/Israeli citizenship to register under a revised FARA, or do you want them to choose between the two?
It's kind of like taxing cigarettes, do you want to reduce smoking, or fund things with the tax money?
Also, do you have any statistics on the proportions of dual citizens by country? As I said, it's a practical problem if you want to target Israel and the policy you want wouldn't in fact do so. But I don't know.
Ostensibly, I think for security clearances, they already take dual citizenship into account. So the conventional wisdom appears to be that is enough.