Two points
1-applause at AIPAC should not be construed as approval.They were told not to boo.In addition Obama was a guest in their house,as well as being the President,and thus must be treated with respect.
2-Had the President simply said-"return to direct negotiations,and at the end of the day with swaps I believe it will be close to pre-'67 that is one thing-although a highly unlikely and inprobable outcome.
However telling Israel that the starting point was "pre-'67" was a public slap in the face,totally unrealistic and as the PM has pointed out indefensible.It leaves too many Israelis out of Israel.Starting from that point would lead to pointless continued debate over each and every Israeli home outside that "border".It would be a sure recipe for failure.
In the end it is all B---S---,since Hamas and Fatah do not want a Palestinian STATE-they WANT ONE STATE PALESTINE SANS JEWS.