I’m not sure the State Department is the “controlling legal authority”, but just out of curiosity in what way do they ‘recognize’ Israeli dual citizenship that they don’t recognize others?
My understanding (and I admit I am not an expert on this) is that the US/Israeli exception arose out of the special circumstances surrounding the formation of the state of Israel in 1948. I know a couple of US citizens who spend half of the year in Israel and the other half here, and who also served in the Israeli army, etc. without jeopardizing their US citizenship.