Israel is dictatorial in the sense it has a political and financial stronghold over Western politics as well as Middle Eastern. The poverty-stricken Palestinians suffer each day as a result of the modern hold of Israel. Lyndon LaRouche is one of the only somewhat popular politicians willing to say this. His ardent following is a result of this being one of his beliefs.
Hardliners elected to the head of Israel's government often overstep international law when new settlements are built in Palestinian territory. Israel, in many ways, is a dictatorial regime mainly because of the hard stances leaders take against Palestinians. There will be no peace as long as Israel continues to have illegal settlements constructed.
No, Lyndon LaRouche is not correct in saying that Israel is a dictatorial regime, because Israel is only trying to counter the multitude of threats that it receives against its existence every day. Israel is extremely misunderstood. LaRouche is just one of many that wants to deny Israel's right to exist.
Lyndon LaRouche is obviously a Palestinean sympathizer. Understanding that, his support for the Palestineans extends to critiquing the Israeli government for continuing to hold power over Palestine. Unless Palestine is granted sovereignty, it will regard the israeli government as oppressive. Yes, the Palestineans have little say in Israeli policy because they are the minority. If you look to even American politics, the minority always claims the majority is practicing Dictatorial style leadership.
The idea that Israel is a dictatorship is something that clearly only makes sense to people looking for things to hate about Israel. Israeli press is actually far more critical of their own government than the US and European media, and the government is a parliament system that makes coalitions and power tenuous.