Good luck on getting a straight answer. Both sides are so steeped in there historical narratives asking people online will get you no place. May I suggest Gelvin's account as a good fairly unbiased place to start: http://www.amazon.com/The-Israel-Palestine-Conflict-Hundred-Years/dp/0521888352/ref=cm_cr_pr_product_top?ie=UTF8
Honestly, I disagree with your basic characterization of the conflict. Israelis, like any other people in history, aren't monsters. The scholar James Gelvin is seen as sympathetic to the Palestinians, but his look into the conflict is a lot different than the accounts I see here.
You're operating on emotion, it seems like a good part of the Muslim world is. Instead of thinking about what would best improve the situation of Palestinians, we resort to these "Well, what would you do?" Questions. The Israeli right wingers do that too. They say what would you do if you lived somewhere your entire life and people lobbed rockets at your towns, blew themselves up in your markets, randomly stabbed civilians and policemen on the street, and refused chances to negotiate?
The Palestinians and Arabs have been trying war since the inception of Israel. It kills their international credibility. It kills innocent people. But we have these romanticized, movie-esque ideas about war, about heroes and villains, and think more fighting is somehow going to solve anything.