Literary: Verse 17 uses the language of one of the Psalms to make his point: "Ps. 118:22 The stone which the builders refused is become the head stone of the corner." While not formally citing the Psalm, he is nevertheless using the imagery. In Jacob's prophetic vision, he would have understood clearly that this "stone" that Israel would reject would be Jesus.
Redaction: Jacob is not beginning a new section of his writings, one that will explain what he places as a rhetorical question in verse 17. The question he will answer is how the Messiah can yet be the cornerstone of the house of Israel if they will reject him. Rather than a simple explanation, Jacob delves into scripture. What follows as explanation is the allegory of the olive tree.