I think this is essentially correct and if so it spells trouble for the Jewish state since, if we are to be honest about US-Israeli relations, it has been staunch American-Jewish support for the State of Israel that has been the principal factor that links American foreign policy so closely with that country. And once this support collapses United States foreign policy will undergo a substantial shift in policy, coming closer into alignment with what is, and has been, the dominant stance of the International Community towards the Israeli-Palestinian conflict, one generally more sympathetic to the Palestinians than the Israelis, as partly indicated with the recent granting by the UN of "non-member state observer status" to the Palestinians, represented by the Palestinian Authority (and to some extent Hamas).
But why is it the case that younger American Jews are gradually becoming less supportive of Israel? I suspect that there are at least two reasons. First, as a general rule the young tend to be more quixotic or idealistic than older groups. And a favorite cause of idealists tends to be the issue of human rights; in this case Palestinian human rights. The concern over human rights is of course by no means something exclusive to the youth of the world, but it's precisely the youth who tend to be the torch bearers of these kinds of causes probably due to a certain naivete that pushes them to believe they can change the world. Now the championing of issues like "human rights" is I think a noble cause, but an exclusive focus on such can lead to a myopia of sorts, often preventing clear-headed and rational thinking about complex topics like the Israeli-Palestinian conflict.
In the case of this conflict such a narrow view means a failure to seriously take into account the national security concerns, no matter how exaggerated we may think they are, of Israel. As uncaring as it may sound a State's first priority is to the security of its people and not to ensuring human rights. Is Israel pursuing many wrong-headed policies, including infringement of some Palestinian rights, in the name of national security? Certainly. However, we must keep in mind that it's all too easy to judge a country's difficulty in balancing legitimate security needs, which Israel does have, and human rights when unlike Israel the United States and most other countries are not surrounded by hostile forces bent on its destruction, or having to endure periodic rockets aimlessly fired into its territory, or suicide bombing attacks among its citizens.
Thus, with this war Israel ceased being the underdog, a status it had held since its inception in 1948. This is important because it's a natural instinct for people to be more sympathetic to the underdogs and oppressed of the world which is what the Palestinians became after this war. In effect, the Israeli's and Palestinians shifted places as result of the '67 War. And so for a lot of the young American Jewish population the only real Israel they can conceive of is a post-1967 one in which the Israeli's have been in control of another people's destiny.
As I've already indicated this bodes ill for Israel. And because, as I also already mentioned, the majority of the IC is more sympathetic to the plight of the Palestinians than to the security concerns of the Israeli's, such a future demographic shift of American Jews towards a much more critical attitude of Israel entails that it is only a matter of time before the United States foreign policy shifts into closer alignment with the rest of the IC since the past and present staunch support among American Jews will cease to influence this country's foreign policy in regards to the Israeli-Palestinian conflict. Many will no doubt embrace such a development since they believe that isolating Israel on the international stage is the only effective means of changing its policies towards the occupied territories.
Here Israel is clearly between a rock and a hard place. On the one hand it could unilaterally withdraw from the West Bank, but this is problematic for two reasons: (1) it could worsen the security situation of Israel, basically erasing the strategic depth it now has, and (2) Israel would be roundly condemned for such a unilateral gesture by the IC just as it was when it pulled out of the Gaza strip on its own accord. And yet on the other hand Israel still doesn't have a viable peace partner or a domestic political situation that would encourage a successful peace process. Furthermore, as long as the UN continues to give victory after victory, no matter how symbolic they currently are and have been, to Abbas of the Palestinian Authority, the Palestinians will feel no incentive in going ahead with any kind of peace negotiations and will continue to trot out continued Israeli settlements as a pretext for future inaction. So what should Israel do? I don't know. All I do know is that the continuance of the status quo no longer favors the Israelis but the Palestinians. Taking the long view it appears that with this crucial demographic change of attitude among American Jews towards Israel means the Jewish state will "lose" out in the end. A result many hope for of course. I am not of this persuasion.