Rioting and demonstrations are now in East Jerusalem and the surrounding suburbs, including the Old City where I live. There's talk of a 3rd Intifida by Palestinians and "all out war" by Israelis. See:
http://www.jpost.com/servlet/Satellite?cid=1230456521714&pagename=JPost%2FJPArticle%2FShowFull and http://news.bbc.co.uk/2/hi/middle_east/7803598.stm
There is fear that Lebanon might start attacking Israel from the north as Israeali troops are now all deployed in the south. http://www.jpost.com/servlet/Satellite?cid=1230456521637&pagename=JPost%2FJPArticle%2FShowFull