In "settlement" areas, the sights of ordinary people having those kinds of guns is not uncommon. In relation to what Keyes said, I think he referred not to who was holding the guns or allowed to hold the guns, but that those holding those guns had ample training.
I just got the feeling that he was trying to give people the impression that Israel was somehow similar to Switzerland-before they enacted more restrictive gun laws-instead of being what is, which is a nation that was founded almost exclusively by socialists.
Granted, the Likud ascension during the 70s drastically altered many of the fundamental aspects of Israeli politics, but I don't think that it completely banished them from the public square.