There are at least two key points here from Obamas speech.. One is that "Palestine" must be a contiguous state. As anyone with a map can tell you, this means that Israel will not be a contiguous state. The second, even more fundamental, is that is that the ultimate peace treaty will be "based on the 1967 lines with mutually agreed swaps."
The 1967 lines are obviously unacceptable to Israel. That would mean a country that is only nine miles wide at its narrowest point, and that does not include, among other things, the Western Wall. Obama purports to think that this is of little significance, since adjustments will be made via "swaps." But Israel starts way behind before it begins "swapping," whereas the Palestinians start by holding all the cards. What, exactly, is Israel supposed to give up in order to regain some of its most historic sites, not to mention the defensible borders which it already holds?
So what President Obama has proposed is antithetical to Israel's interests, and therefore to the United States' interests, because he wants Israel to begin negotiations from a deep hole that does not in any way reflect conditions on the ground. If this isn't selling our ally down the river--and, thereby, selling out our own interests--what is?