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This is not "classic" covenant theology, but an inept modern justification of it.
The "classic" definition is that the Mosaic covenant is essentially a covenant of grace. There are circumstantials added to it from the covenant of works, which subserve the interests of the covenant of grace until Christ comes. In these circumstances Israel typifies Christ. Israel's "circumstantial" failure is owing entirely to its nature as a type. The land for Israel was a type of rest to be found in Christ, and Israel of the promise is not one and the same as Israel after the flesh.
The modern idea destroys the typological element and introduces confusion as to the gracious nature of the Mosaic covenant. It also undermines the continuity of the covenant of grace so far as the inclusion of infants is concerned, because that inclusion depended upon their national citizenship; if that citizenship was a part of the covenant of works, there is no grounds for their inclusion in the NT administration of the covenant of grace.
Look before you cross the road!
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Yours sincerely,
"Illum oportet crescere me autem minui."
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