the conspiracy theory is about shabak, not the mossad and it was spread by radical israeli right-wingers as a conpiracy by, what they consider, a leftist shabak that was trying to delegitimize the right and increase the support for the left.
yigal amir supported kahanists like ben gvir and his ilk, not the likud.

after rabin, there was ehud barak who was voted in, who also tried to reach a 2 state solution with arafat in 2000.