It's not just the potential military conflict between Egypt and Israel that is of concern, what makes this troubling is that Egypt is basically the figure-head of the Islamic world, home to the Arab League's HQ. In it's capacity as a major player in the Arab world and being the only major Arab nation to recognise Israel, it has done well in keeping the peace between other Arab nations and Israel. If it aligns with Iran and begins to show hostility toward Israel, that could be a huge setback.
The Egyptian Armed Forces are nothing to laugh at either. It's the largest in Africa and the Arab World and the 10th largest in the world. It's also modern. It's Navy is also the largest in the Arab World and is a major power in the Med, the likes of Israel, Turkey and Italy included. Israel estimate that they match the Israeli Air Force in the number of modern fighter aircraft (an estimated 240 F16 Fighting Falcons being the centre piece) and the Egyptian ground forces have far more tanks and artillery pieces than the IDF. Of major concern is that outside of the US, the Egyptian army has the largest complement of M1 Abrams main battle tanks, numbering an estimated 1,100. The only question is the capacity of it's command structure because in terms of equipment, numbers and modernisation levels, the Egyptian army is more than a match for their Israeli counterparts.