The names Avraham and Yisroel differ in that the former is a “replacement name,” while the latter is merely a “meritorious name.” A replacement name is not only more meritorious than the original, it totally displaces it. A meritorious name is loftier the original, but does not supplant it. Thus, the name Yisroel is superior to the name Yaakov, but does not supersede it.
To understand all this in terms of man’s spiritual service: The four names Avram, Avraham, Yaakov and Yisroel reflect four different grades of spiritual service. The first level is that of Avram, followed by Avraham.
Our Father Avraham began serving G-d by working on himself. He sought to find merit in others, and dedicated himself to understanding Divinity and acting only with kindness to his fellowman, distributing tzedakah to the needy, and helping all and sundry. Ultimately, he reached such a high level that he became master over his body, having refined his limbs. There are five bodily organs exceedingly difficult to master.1 When Avram achieved mastery over the 243 organs as indicated by his name Avram, numerically equal to 243 G-d then granted him the ability to master the remaining five as well. This is indicated by the name Avraham numerically equal to 248. All of Avraham’s five senses and 248 organs were then wholly devoted to G-d’s service, as the Midrash states:2 “The Patriarchs were verily the ‘Chariot’ ”; just as a wagon exists only to satisfy the needs of its rider, the Patriarchs existed only to fulfill the Divine Will.
Herein lies the meaning of the names Avram and Avraham. Once the latter level is reached, G-d gives a person the ability to gain control over the remaining five organs, so that they too will be totally dedicated to fulfilling G-d’s will. The spiritual level of Avraham thus superseded that of Avram; having reached new spiritual heights, his former level of service vanished.
But the name Yisroel does not supplant the spiritual service of Yaakov. For Yaakov and Yisroel are two distinct levels in Divine service [both of which are always necessary]. The spiritual service of Yaakov is that of a servant, as the verse states:3 “Hearken [to Me], Yaakov My servant.” The service of a servant involves simple tasks performed out of fear [and awe of the Master]. The spiritual service of Yisroel is the service of a son, as the verse states:4 “My son, My firstborn, Yisroel.” The service of a son stems from cognizance of [his Father’s] greatness [and his love for Him]. While the service of a son is spiritually superior to that of a servant,5 it does not supplant it [for both kinds of service are necessary].
This is the meaning of, “How goodly are your tents (ohalecha), Yaakov”: Ohel refers to that which encompasses the level of awe implied by the name Yaakov. “Your dwelling places, Yisroel” refers to the spiritual service of a son, which comes about not from an encompassing awe but from an inward one.6
In summary: The four names can be explained in terms of spiritual service. Avram reflects a level that can be achieved by human effort. Avraham reflects the additional G-dly power that enables all the limbs and senses to be utilized in serving G-d. Avraham supersedes Avram. Yaakov is the service of a servant, while Yisroel is the service of a son. Thus Ohel (meaning outward or encompassing) is used for Yaakov, while mishkan (meaning inner dwelling place) is used to describe Yisroel.