Sorry. I'm reading Liberal Fascism by Goldberg right now.
One of the funnier books I have read. If you want a good laugh skip ahead to his chapter on Hollywood. Did you know that Kevin Spacey's character in American Beauty was really a progressive fascist anti-hero? Classic stuff.

It was an ABSURD "request" that no self-respecting people would ever agree to.
Previous Israeli administrations have disagreed with your characterization.
Your characterization of Obama merely "signaling" his displeasure, etc., undersells the effectiveness and potential damage that can be done to vulnerable nations like Israel through U.S. diplomatic maneuveurs.
What other actual damage has Israel suffered due to the Obama administration's actions?
(especially given the bad faith on the Palestinian side)
Both sides have shown plenty of bad faith over the years.

It's another possibility that would have to be considered in the field of possibilities
Yet you seem to have taken Netanyahu at his word without hypothesizing inappropriate motives and are far less generous when it comes to your reaction to Obama.
Your "what I actually think" scenario does approximate an Occam's Razor explanation, but so does the explanation that the Obama administration overreacted (either purposely or otherwise) to a contrived controversy.
I don't see the Obama administration's response as an overreaction, nor do I see the controversy as contrived.
Why should Netanyahu and the Israeli people have to "pay a price"?
The price paid was enduring some harsh words. It was a price paid by Netanyahu and Yeshai and that is pretty much it. There have been no consequences beyond a bit of stern rhetoric.
Do you esteem either side - Israeli or Palestinian
The Israeli's are the better of two bad players in this conflict.

What has Obama said that "expressed a desire to" overthrow (even in a figurative sense) the Netanyahu government? Give me any quote from Obama that expressed the desire she claims he expressed. It simply does not exist. Glick made it up.

Either way, it is a radical position, I think, to call for such a moratorium. It would be like if Chavez and a majority of the U.N. members called for a development moratorium in areas along our border with Mexico, in cities like San Diego, Brownsville TX, or so forth.
If we in an active dispute with Mexico about who legitimately controlled them, the international community including the UN did not recognize our sovereignty over those areas, Chavez was seen as a potential fair moderator and Venezuela was the country most likely to bring both parties to the table then it would be reasonable for Chavez to request for no American only settlements in those areas until after negotiations and to be upset if we ignored that request.
If the Obama administration "requests" a moratorium for EJ and Israel says "no thank you," how can they be surprised when Israelis continue to develop parts of EJ
The surprise was at the insulting timing of the announcement. The Netanyahu administration continuing to build in EJ when Obama (and many many others) think that it will negatively impact coming peace negotiations explains the rest of the upset. In short Obama requests a moratorium on building Jewish only settlements until after negotiations, Netanyahu says yes to only part of that request, Netanyahu's administration announces continued building in EJ at a time insulting to the Obama administration, the Obama administration reacts negatively.

Now stepping outside what I think really happened into a mirror of what Glick asserted.

Scenario 1: It is quite possible that Netanyahu coordinated with Yeshai, using him as a cat's paw to test Obama's resolve*. Netanyahu is then left open to pursue further if Obama backs down or can claim ignorance if the attempt fails. The attempt backfired and Netanyahu was thrown back on his heals. It all boils down to political brinksmanship on the part of the Israeli hard right and it was an abject failure for which they had to pay a price.

I have provided every bit as much evidence as Glick and I find my scenario far more plausible.

Onto what I actually think:
Yeshai was playing to his hard right domestic audience and cared little about what effect it might have outside of that.

* like Medvedev attempted w/ missile defense a short while back.

Occam's razor should apply I think my explanations are considerably more parsimonious.
it is quite reasonable to interpret that one of the main reasons that the Obama administration did such a full court press on the contrived housing development "controversy" was that they were using it as a pretext to try to undermine Netanyahu's domestic position
He disagrees with Netanyahu and his coalition's position regarding current Jewish only settlements in the disputed territories prior to peace negotiations. He would like a shift in Israeli public opinion and policy on that front and has spoken on that point directly with Netanyahu and in other statements. So yes he wants to 'undermine' Netanyahu's government on that front. I see no problem with that, do you?
maybe the Obama administration and the Israeli left both coincidentally planned ahead of time to use the announcement as a pretext. "If/when the announcement comes out, let's make a mountain out of a mole hill."
Again Occam's razor should prevail. The timing of the announcement was determined by a hard right member of Netanyahu's administration, so hypothesizing that the left is somehow responsible does not pass the sniff test. Continuing it only weakens your other arguments.

She did argue, if I remember correctly, that it was the expressed desire of the Obama administration to effect "regime change" in Israel by undermining Netanyahu's domestic political position.
again she said, and I quote,
Obama's expressed desire to overthrow the democratically elected government of Israel stands in contrast to his refusal to acknowledge the basic illegitimacy of the Iranian regime he seeks to appease.
Yet no one has pointed to anything Obama has said the expressed a desire to overthrow the government of Israel or to initiate any sort of regime change in Israel. There is not one bit of support for the first assertion and to support the second assertion requires some byzantine logic.

Those who argued that the Obama administration was mainly upset about the timing suggested that it would have been okay (wink, wink) if the Israelis had just waited to make the announcement after Biden had left.
The timing made it near impossible to ignore. Had the timing been different the response would likely have been less forceful.
If Obama administration were upset about the announcement, itself, that suggests it believes the Israelis should shut down all development in East Jerusalem.
It has been the stated opinion of the Obama administration that there should be a hold on new Jewish only settlements in all disputed territories including East Jerusalem until after negotiations.
(Netanyahu only agreed to a hold on building in other disputed territories, excluding E Jerusalem, and that only for ten months.)
Does Obama intend to impose a such land redistribution arrangement on the Israelis?
I doubt he plans to 'impose' any land distribution arrangement on Israelis or Palestinians, rather he plans to mediate negotiations between them. He will likely be upset with actions that make those negotiations more difficult as this action did/does. I have no problem with him signaling that upset, YMMV.

Scenario 3.5: It is at least in part political theater to convince the Palestinians that Obama will be sympathetic to their concerns in the upcoming negotiations. If the Palestinian street is convinced that their concerns have a sympathetic ear then it is much more likely that some progress can be made. A plurality of Israeli's will likely think that Obama is either neutral or sympathetic to Israel and that also helps.
Domestically it works against the he is weak in foreign affairs myth.
Scenario 4: The Obama administration was actually upset about both the announcement and its timing because they saw it not as just a political affront but as an impediment to upcoming peace negotiations.
Scenario 5: Were Obama not to have responded harshly to what most people in the world and even in Israel saw as an insult he would have appeared weak and that would be counterproductive in the upcoming negotiations.
My best guess is some combination of my three proposals and that he would not be at all upset if this resulted in Livni being brought in to the Israeli governing coalition. I think that the best chance for progress in the peace process is with an Israeli government coalition of Likud and Kadima. I don't know if it much matters whether it is Netanyahu Livni or the other way around.