Speculation about the future is running rampant. On the one hand, a leader has been retained; Bush was elected. On the other hand, Arafat is out of the country for the first time in years, and it is widely suspected that he will not recover.
The theme of the month is uncertainty. For instance, today's article on the Arafat situation is typical of the confusion regarding his condition and who's in charge in Palestine. The Israeli government is, for now, maintaining a low profile, although it's unclear what will happen if the Palestinians insist on burying Arafat in East Jerusalem, or if the succession struggle spins out of control. Or, for that matter, if it doesn't, and it begins to look like Hamas is going to come out on top.
Taken for himself, many Israelis were pleased that Bush will remain President in the US, as he is seen as relatively less likely to lean on Israel for concessions. In particular, he has been perfectly content to insist that "terror" end before Israel is obliged to do anything in particular, which is widely regarded as code for never. There has been some speculation that he would change his tune in a second term in an effort to regain favor with Europe, but the conventional wisdom was that Kerry would do the same, and probably more aggressively.
But then Arafat leaves center stage, potentially upsetting a delicate balance. On W's watch, Israel doesn't need to talk to the Palestinians in any official capacity, because Arafat has been declared not to be a "partner" in the peace process. If new leadership enters the picture, it becomes more difficult to maintain such a stance; Bush will have to either offend his Israeli supporters by insisting that the government give the new PA leadership a chance, or else reveal his position for what it is, a carte blanche for Likud to do as it pleases.
At the moment, the government seems to be working on the first theory. As best I can tell, there is some movement in Sharon's administration to make a show of working with whoever winds up in charge of the PA, to head off any intervention on Bush's part. I suspect they guess that, since the disengagement from Gaza buys them several more months during which they can claim to be too busy dealing with the settlers to worry about the Road Map, they have plenty of time to discredit the new Palestinian leadership, too. (For instance, see here in today's paper.)
Handy tip for the traveling astronomer: in Hebrew, the word for "telescope" is telescope.