I understand Ahmadinejad's remark as a very stupidly expressed affirmation of support for a Right of Return for Palestinians. If implemented this would be likely to lead to a situation where Israel's poplulation was more or less eqully made up of Jews and Arabs. That's how it should have been all along, if the 1948 war had not resulted in ethnic cleansing.

I think that is probably not going to come about. But it is an outcome which has always been favoured by some Israelis, both Jews and Arabs.