...if this government falls, the next one can pass legislation overturning this new law, since the Knesset can change both how its Supreme Court Justices are selected and what matters the court can adjudicate at any time.

Yes, the lack of stable laws is a great problem for citizen conformity to criminal injunctions, and for a free market economy, businesses plan on the basis of laws, and that is why the reasonableness standard is so damaging. A higher standard to nullify legislative acts establishes guardrails and avoids fickleness.