Well, Bibi is broken and will now have to sit down with the Palestinians for reals.
Now, before we open the champagne, let's note that Netanyahu forced the issue himself, which means he didn't just surrender to the alignment surrounding him: he's still in control which means he's still going to have final say on what transpires.
But it seems pretty clear that the Kadima Party-- Netanyahu's main adversary in the Knesset-- extracted a price from his flesh, which means he has to at least go through the motions of making overtures to Mahmoud Abbas and the PA in order to keep his own clutch on power.
The one real bright spot is that Shaul Mofaz, the leader of Kadima, is dead set against pre-emptive action against Iran and as a former military chief and defense minister, has some stroke in this area.