My wife was born in the US, and has lived her whole life here except for two years studying in seminary in Jerusalem.

According to something I just read (on the Nefesh b'Nefesh website), any child born to an Israeli parent is considered an Israeli citizen, even if the child has never set foot in Eretz Yisrael.

(So long as the parent didn't renounce his/her Israeli citizenship.)

My father-in-law (alav ha-shalom) was Israeli. That makes my wife Israeli. When I told me wife, she was very surprised.