I agree this is not good for Israel. A democracy is partly measured by its ability to tolerate voices it does not approve of. Israel should be stronger than this. I agree that using national security as an excuse is a slippery slope.

This is mostly a symbolic move that will make very little difference. Likely it will push Al Jazeera to be more anti-Israeli but I'm sure they can make up (pun intended) for their lack of physical presence in the region. People that want to consume that content in Israel will have no problem (many already get this via satellite).

A by the way is that this can still be challenged in the courts. If Al Jazeera chooses to go to the supreme court I imagine there's a pretty good chance that the decision will get overturned. They might intentionally decide not to do that because that outcome will put Israel in a positive light.