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On the one hand I get they want to make the zionists look strong, but on the other wouldn't it lend itself to greater urgency and frothing rage if they met the Iranian narrative half-way

I think the answer is simple. Isntreal is a settler-state, and it is a settler-state which has not succeeded in eradicating the indigenous peoples to such an extent that they are the minority (when one considers the surrounding Arab and Muslim-majority states actually, rather the opposite).

They have to maintain the image of the "untouchable ubermensch." Psychologically they have to, but also strategically; all they offer the local peoples is terrorism and genocide, so they must ensure that all the local peoples (who number more than them) fear them more than they hate them. This is also exactly the same as how colonial forces across the globe acted- with the promise of extreme and inordinate terrorism- to maintain their rule, and to create the circumstances where they could establish rule to begin with.

The other older settler-states have similar dynamics, but have had more time and space (through the successful and extensive genocides and conquests they engaged in- ie. through their successful lebensraum/Manifest Destiny) to settle into a more "lax" phase of settler-colonialism, where the genocides take a quieter, more low-key form of suppression. They all had the same foundational psychology however, and will all generally act in the same way Isntreal has if provoked. And of course, the examples of all the failed settler-states (Nazi Germany, French Algeria, "Rhodesia," British Kenya, Apartheid South Africa, etc. and even the resurgent indigenism within parts of Latin America) show what happens if the settlers cannot succeed in genociding off the vast majority of the indigenous peoples of an entire geographic region.