Who do you think that is over in Palestine today?
Exodus 19:6
And ye shall be unto me a kingdom of priests, and an holy nation. These are the words which thou shalt speak unto the children of Israel.
Peter 2:9
But ye are a chosen generation, a royal priesthood, an holy nation, a peculiar people; that ye should shew forth the praises of him who hath called you out of darkness into his marvellous light;
They are holy because they are a chosen nation. They are a peculiar people, and when Peter spoke this to them they were strangers in five provinces of what is now Turkey.
1 Peter 1:1 Peter, an apostle of Jesus Christ, to the strangers scattered throughout Pontus, Galatia, Cappadocia, Asia, and Bithynia,
2 Elect according to the foreknowledge of God the Father, through sanctification of the Spirit, unto obedience and sprinkling of the blood of Jesus Christ: Grace unto you, and peace, be multiplied.
A stranger is someone who is out of their land and wandering around in someone elses.
What impact are these circumcised strangers having on the populace?
1 Peter 2:12 Having your conversation honest among the Gentiles: that, whereas they speak against you as evildoers, they may by your good works, which they shall behold, glorify God in the day of visitation.
These strangers are the scattered 10 tribes that Hosea the prophet addressed in his prophecy 700 years before. They are the elect because they have believed Paul and Peter and the apostles and prophets who preached Jesus to them and now they have the Holy Spirit in them because they believed and have been set apart for God because of it.
Dispensational theology is the only thing that makes sense. BTW, Peter wrote this some 35 years after Jesus died and was buried and rose again.