As for the long-term strategic effects: We don’t know. But we do know that the cherished “peace process” doesn’t even have zombie status.
Will there be more terrorism? Sure. As there would have been more terrorism, anyway. Terrorism isn’t about us, it’s about them.
If Arab leaders refuse to let the “Palestinian question” shape their policies, why should we allow it to deform ours?
A Central-Asian proverb runs that “The dog may bark, but the caravan moves on.” The hounds of appeasement have barked for generations, but the Israeli caravan kept going, arriving at the only admirable (or even livable) state in the Middle East, an island of civilization amid vast deserts of barbarism.