What if, during the 1948 Arab-Israeli War, Operation Kedem had been a success? What would be the long-term consequences for Israeli Arabs, as well as for the rest of the war and the subsequent sixty-odd years since?
Well, Israel would come under intense pressure to cede the whole thing, and there would be a widespread refusal to recognize Jerusalem as Israel's capital. But there will probably still be 14 foreign embassies in Jerusalem, and since there is no Jerusalem Law of 1980, they stay there to this day.
I think there might be even more pressure on Israel than there was in OTL, because it would be seen as even more inconvenient that a single power controls the whole thing, rather than the disputing parties each getting a sector. The pressure will be enormous, but Israel will be totally defiant, and will eventually win.
Israel would not be being asked today to divide Jerusalem, but the status of the Temple Mount could still be an issue.