Agree the whole Palestine and Israel subject is best avoided as most people dont care, but I certainly dont remember it being bought up that much outside of the anti-Semiticism debate. Yes, sections of the grass roots are a bit obsessed, and its been a big subject in the past for people like Corbyn but its not something that gets brought up that often.
I think the problem is that it infects the party, seen for (too) many as a fundamental fault line on which to judge individuals (see Geoff's view that the next leader should not be linked to LFI). It's the ultimate source of modern antisemitism in the party and poisons other areas of party infighting and public perception - soft on terror, 'friends' of Hamas, connections to Palestinian supporters who ('unfortunately and unknowingly') turn out to be Holocause deniers, awkward alliances with reactionary and conservative countries or groups in the UK and elsewhere.
Labour MPs are routinely harassed (online and at events) for being linked to LFI - which is accused of being a tool of the Israeli government/embassy, along with their friends in the media, to weaken the Corbyn project because Israel doesn't want a Labour government which is friendly to the Palestinian cause. This is deranged. Firstly, of course, it combines two of the most persistent antisemitic tropes (secretly controlling politics and the media). But secondly, why on earth would Israel worry about the view of the UK government? The USA is the arbiter of Israel-Palestine. It vetoes anything at the UN it doesn't like (consistently, and regularly). Israel doesn't need a friendly UK.
It may surprise Geoff to know that I do oppose illegal Israeli settlements, occupation, destruction of infrastructure, theft of Palestinian productive land, harassment of Palestinians by extremist settlers and some actions of the IDF. However - to be blunt - I'm sick of it effectively defining the Labour party. Whatever the Labour party's position on Israel-Palestine is, its future will be decided elsewhere. Many European countries are more supportive of the Palestinian position than UK governments have been historically - it has no effect. Why should the UK suffer the consequences of the issue suppressing Labour party domestic policy and organisational energy?
The Labour party should be broad enough to encompass robust supporters of the Palestinian cause (and critics of Israel) as well as friends of Israel - providing that support is for groups and actions within international law and which are in accordance with party rules. Not support for illegal occupations, and not support for organisations whose charters demand the destruction of Israel. And then the party needs to STFU about the subject, because it will still be there to be sorted out in 50 years and it won't be the UK that does it.