Nope, you got that wrong. If Israel would have received Christ as their Messiah, then the Lord would have used the nation of Israel to be the light to the Gentile world. The city on the hill should have been Jerusalem. They rejected Jesus, so the Lord would use a Jewish man to reach the Gentiles, the Apostle Paul.
No, God used a nation that would bear the fruit. Paul was only one member of that spiritual nation.
Matthew 21:33-46
33 “Hear another parable. There was a master of a house who planted a vineyard and put a fence around it and dug a winepress in it and built a tower and leased it to tenants, and went into another country. 34 When the season for fruit drew near, he sent his servants to the tenants to get his fruit. 35 And the tenants took his servants and beat one, killed another, and stoned another. 36 Again he sent other servants, more than the first. And they did the same to them. 37 Finally he sent his son to them, saying, ‘They will respect my son.’ 38 But when the tenants saw the son, they said to themselves, This is the heir. Come, let us kill him and have his inheritance.’ 39 And they took him and threw him out of the vineyard and killed him. 40 When therefore the owner of the vineyard comes, what will he do to those tenants?” 41 They said to him, “He will put those wretches to a miserable death and let out the vineyard to other tenants who will give him the fruits in their seasons.”
42 Jesus said to them, “Have you never read in the Scriptures:
“‘The stone that the builders rejected
has become the cornerstone;
this was the Lord's doing,
and it is marvelous in our eyes’?
43 Therefore I tell you, the kingdom of God will be taken away from you and given to a people producing its fruits. 44 And the one who falls on this stone will be broken to pieces; and when it falls on anyone, it will crush him.”
45 When the chief priests and the Pharisees heard his parables, they perceived that he was speaking about them. 46 And although they were seeking to arrest him, they feared the crowds, because they held him to be a prophet.
(ESV)
Who is that nation? The Church:
1 Peter 2:9-10
9 But you are a chosen race, a royal priesthood, a holy nation, a people for his own possession, that you may proclaim the excellencies of him who called you out of darkness into his marvelous light. 10 Once you were not a people, but now you are God's people; once you had not received mercy, but now you have received mercy.
(ESV)
They are now spiritual Israel as Eph 2 states.
Dispensationalism is simply a false doctrine.
Since they are the majority in the USA among conservative evangelicals, they are virtually unchallenged but their teaching is clearly false. However, their true center of power is amongst charismatics/Pentecostals and they are not very doctrinally discerning so they are able to retain their majority status.