The good news comes in two parts. First, God has not put Israel so far away that it has no hope of salvation. Paul says plainly, "So all Israel will be saved." He is very positive that the vast majority of Israelites will enter God's Kingdom. Peter says in II Peter 3:9 that God "is not willing that any should perish but that all [all humanity, including Israel] should come to repentance."
Second, because of what Israel experienced—and yes, because they failed—the called of God, Christians, have been given the opportunity for salvation now as the firstfruits. God knew all along that Israel would fail; it was part of His plan to create a historical record of a physical people attempting to keep His covenant. Among other things, He desired a people—Israel—to show His regenerated children the absolute futility of life without Him, even if it is lived under the best circumstances.
God loves Israel, so He did not commit them to eternal disobedience and condemnation. Very few of them have lost their opportunity for salvation. He has simply put them aside for the time being. Other places in the Bible explain that God will open salvation to them later, when conditions will be even better for them (see Ezekiel 37:1-14; Revelation 20:12-13). As Paul says in Romans 11:31, the salvation of Christians will eventually work out for the benefit of the Israelites: They will also obtain mercy (see also verses 11-15, 23-25).
Nevertheless, due to their being "broken off" from the vine (verse 17), a place has been made for others to be "grafted in." We should note that the vine's roots and trunk, as it were, were never rejected—just some of the branches. This means that God's Kingdom is still in large part an Israelite Kingdom! It is still rooted in the Patriarchs, the prophets, the teachings and promises, the house of David, the Twelve Tribes, and the most important of all Israelites, Jesus Christ of Nazareth.
No, Israel, though blinded to God's way for now, remains a vital part of God's plan of salvation!