Expectations of the Obama administration could hardly be higher: both in terms of domestic promises (fixing health care, etc) and international ones (fixing climate change, etc). Successfully addressing a good number of the pressing issues facing the United States would make for a very successful presidency. That being said, it may be overly optimistic to hope for progress on all fronts. There is only a limited amount of time even the most energetic and capable administration has, and there is always the need to negotiate with other actors, most importantly the US Congress. In the end, it is better to make strong and durable progress on a smaller subset of issues than to make a weak and easily reversible advance on many more.
It seems to me that one area where Obama should consider limiting his engagement is the Israeli-Palestinian dispute. The region is undeniably in crisis, and there is most definitely both severe human suffering and considerable injustice ongoing. That being said, it is not clear that Obama could contribute usefully to reducing either, and it is clear that attempts to do so are time consuming and costly, in terms of political capital and energy. In order to get a sense of that, one need only look at the amount of effort some past presidents have put into the region (Clinton and Carter, for instance) and the very limited long-term results from them doing so.
If anything, the current situation in Israel and Palestine is even more fractured, unstable, and volatile than has been the norm in recent decades. In addition, the political leadership of the Palestinians is fractured in two, with Hamas openly advocating a second Holocaust. Given the absence of a situation conducive to negotiations, the prospects to do anything more than somewhat reduce the level of violence are very limited. With that in mind, perhaps the best course for Obama to take would be to send a respected special envoy to the region to try and contribute positively, while devoting his own time and attention elsewhere. Certainly, it makes sense to reiterate the most important points for an eventual resolution (a two state solution, demolishment of many settlements, an end to violence, etc), but pushing to achieve these things within the next four years seems far more likely to be a distraction than a path to accomplishment.
To those who will disagree, I ask what specifically Obama should do to produce outcomes that are better than those that would be achieved through the approach above.