The economic feasibility arguments presume an inability to expand the Port of Eilat any further than the current, extremely narrow border that Israel holds with the Red Sea. Presumably any serious contender with Suez would be a joint effort with the Jordanians at Aqaba, possibly with the Saudis as well at Haql (i.e. focus on building a canal along the Israeli/Jordanian border, and build an oil pipeline terminal starting at Haql, for sheer lack of room otherwise).
While the Negev terrain is uneven, it's also sparsely populated. The land is mostly either nature preserve or reserved for military training. Most of the debate would involve who would be on the hook for the cost of construction, as well as how best to balance the canal route vs. pre-existing nature reserves.