What are the implications? Israel isn't going to align with Russia or China, so probably they'll have to stand on their own and rely more on their nuclear deterrent. It'd be easier if they weren't bombing every single neighbor they have though.
The neighbors who signed peace treaties (Egypt, Jordan) seem to be maintaining peace fine.
It's the ones who've refused to normalize relations since 1949 and keep launching rockets over the border at civilians who get hit back.
And, yes, the settlers are not a good thing--but the problem exists because the government knows they are not the actual cause of the problem, Israel would gain nothing from curtailing them. And note that the violence is wildly misreported, much of it is defensive in nature (look at how often you see one person get shot who is facing the settlers when supposedly they were fleeing--awfully hard to shoot a fleeing person in the front) and plenty of it is purely fake.