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Well the Arabs could try peace, but if it happens as you say then Israeli jews will do whatever they have to do to survive, which they cannot do as a minority in an arab state, and if that process results in their failure to survive they will take down whoever is the agent of that destruction with their nukes as they go. It would be smart for the arabs to deal.
It would be even smarter for the Zionists to deal, even with nukes Israel can't take out every Arab on the planet or even the ME.
And then you have a lot of non-Arab Muslims as well, around a billion of them IIRC, I doubt they will be happy seeing millions or even hundreds of millions of their co-religionists burnt to cinders.
What you seem to be constitutionally unable to acknowledge is that there are elements on both sides who don't want peace and those elements are mostly in control of events. It's rather like a bad marriage in some ways, both sides know exactly how to push the other side's buttons to get precisely the reaction they want.