I can't tell if the Saudi government is as delusional (gift article) as the Biden Administration about what the current government of Israel would actually ever allow to happen, or if MBS has a solid understanding of the situation and is simply using Biden's commitment to a two-state solution to manipulate Biden's administration.
Either way, I think entering into a formal defense treaty with the Saudis is a terrible idea. I don't think getting formal Saudi recognition of Israel is worth it.