I would have to say that there is a definite case for Judaism being included as a major religion. Besides the fact that it has had a tremendous influence on all abrahamic faiths, it has had many followers outside israel, from spain to north africa to the edge of the middle east, and not just the diaspora.
Also, I think that the issue of it being non-proselitistic is a bit of a moot point as well: one could argue that hinduism and taoism are nothing more than the state religions of india and china respectively, the only difference between the former and the two latter is that China and India are larger than israel.
I beleive that the key to keeping Judaism contained in the early statges of the games lies in creating incentives for not choosing a state religion. I've toyed with the idea in mods of making "paganism" civic more like "free religion": no state religion, 'pagan' temples that create happiness under paganism civic and unhappiness in cities that have religions attached to them. In that way, there are incentives for, say, the roman empire to stick with paganism rather than convert to Judaism the minute it pops up in one of thier cities.