He uses some of your favorite theologians. (Did Dulles actually write for America Magazine? Ouch)
The Catholic Church does not believe in a dual-covenant theology in which Jews are saved by the Old Covenant while Gentiles are saved by the New Covenant.
Avery Cardinal Dulles, SJ, wrote an article in America magazine (October 21, 2002):
While [Pope John Paul II] does not “target” Jews in any special way for conversion, he makes no exception for them. On the part of Catholic Christians, “dialogue should be conducted and implemented with the conviction that the Church is the ordinary means of salvation and that she alone possesses the fullness of the means of salvation” (No. 55). This does not mean, of course, that we must despair of the salvation of non-Christians or that they are to be pressured into accepting our faith. On the contrary, Vatican II made it clear that God offers the possibility of salvation to all who conscientiously strive with his help to find his truth and do his will, and that explicit Christian faith, while it is a great blessing, must always be free and un-coerced.
Later, Cardinal Dulles wrote in First Things (November, 2005)
Vatican II brought out the profound truth that the mystery of Israel and the mystery of the Church are permanently intertwined: “As this sacred people searches into the mystery of the Church, it recalls the spiritual bond linking the people of the New Covenant to Abraham's stock.” The Church is conscious that she is a branch grafted onto the olive tree of Israel. Pope John Paul II was deeply conscious of this affinity. Speaking at the synagogue of Rome on April 13, 1986, he made the point: “The Jewish religion is not ‘extrinsic' to us, but in a certain way is ‘intrinsic' to our own religion. With Judaism, therefore, we have a relationship which we do not have with any other religion. You are our dearly beloved brothers and, in a certain way, it could be said that you are our elder brothers.”
In continuity with Vatican II and earlier Catholic tradition, John Paul II saw the two covenants as intrinsically related. The Old is a preview and promise of the New; the New is the unveiling and fulfillment of the Old. “The New Covenant,” he declared, “serves to fulfill all that is rooted in the vocation of Abraham, in God's covenant with Israel at Sinai, and in the whole rich heritage of the inspired Prophets who, hundreds of years before that fulfillment, pointed in the Sacred Scriptures to the One whom God would send in the ‘fullness of time.'
Some Christians, in their eagerness to reject a crude supersessionism, give independent validity to the Old Covenant. They depict the Old and New Covenants as two ‘separate but equal' parallel paths to salvation, the one intended for Jews, the other for gentiles ...
It is unthinkable that ... Paul would be proposing salvation for Jews apart from Christ ...
So I do not think Pope Benedict XVI is undoing what he did in 2000 (Dominus Iesus). I think he is continuing what Pope John Paul II began. It is a matter of LOGISTICS, EMPHASIS and PRIORITY not one of doctrine and dogma.
Here are five terrifying words for my family, friends and people in my inner circle: "I have a good idea."
When one reaches the level of a Monsignor, let us take leave of the lowest common denominator theology.
Worrying about what the next best thing is in moral order to sleeping around with HIV or saying Catholics are relieved of the burden of witnessing and conversion of a sector of people may seem ok from the perches in Rome, but your talking to a generation that has been robbed of their faith. The bar has been too low for too long.