To take a somewhat more cynical view:
In my personal opinion ...
a) the Home Office did absolutely NOT want these particular questions ("is Israel an Apartheid state?". Also: "even if not, do its policies, specifically, have implications for whether or not Palestinians with Israeli citizenship - especially but potentially not only if they voice political opinions - would qualify as a persecuted group with general grounds to claim asylum?") go to a court of law.
b) because, if the answer were to be "yes, and yes" - or even just "no, but yes", this would set a legal precedent.
c) that would then put the government in an embarrassing position.
d) never even mind its potential to trigger multiple more (now legitimised by precedent) claims on the basis of comparable situations (and we all know how much the government loves asylum claims ... NOT)!
e) if d) then - what would that mean for Palestinians in East Jerusalem, the West Bank, and Gaza if not "at the very least the same"?
I see the Home Office caving in here as more of a "let's put the lid back on before this spirals out of control" than an acknowledgement of anything. In fact, I think its their exact objective to avoid the same.
And, no, I'm not a legal or asylum policy expert - I do trade in cost/benefit analyses as a day job.