This is so fucking stupid that I had to check other sources on what he said, to confirm it. (It does.)
No, it is not just immoral, it's also fucking stupid. Why would he get the Palestinians or the State of Israel pissed, if he can get both pissed at the same time? The State of Israel doesn't see those lands as belonging to some ~~banana~~ maize republic dammit, it sees those lands as belonging to itself.
inb4: "but Netanyahu said he was thinking outside the box with fresh ideas! That it's unconventional thinking!". Well, his reply is superficially polite (likely to avoid the offend the other Nazi's precious-oh-so-precious ego), but it's non-committing and can be easily understood as "this is crazy talk".
It gets worse. So far the State of Israel has been trying to masquerade the genocide against Palestinians as a self-defence war. Now with Trump suggesting ethnic genocide, more people will ask "wait a minute... isn't that what Israel is doing already?" (Yes, it is.)