The situation about Israel and Palestine is really not that much about religion. Religion is just an excuse to mobilize people to join in the political cause.
Israel, as some have kindly pointed out, is a major US ally in the middle east, but by far NOT the only one. A less publicize ally is Saudi Arabia, which is a major oil provider to the US, ensuring that an oil embargo can never happen to US again. btw, saudi is one of the most despotic regimes in the world, many times worse than saddam or taleban. So much for democracy promotion.
Israel's importance was highlighted in the 1970s, when it crushed the secular nationalistic Nasser government of Egypt, and from then on, the secular nationalistic movement in the middle east lost momentum, and religious extremist groups rose to fill the void, resulting in the highly religiously fundamental middle east we see today.
US pumps A LOT of aid into Israel and Saudi and Turkey to maintain its hold over oil, both for profits of oil firms, and its political leverage against the world. The Afghanistan and Iraq wars are basically reinforcing the control over the area, against the rebelious taleban and Saddam. (They stopped listening to the US as much)
As for Israel, since its formation in the 1940s, it continuously seeks to expand its land, as land is a very valuable resource (for housing, factories, military, everything basically). Hence, the militarily superior Israel, armed with latest USA exports and not to mention nuclear weapons (the search for weapons of mass destruction does not go much further than this), builds settlements on Palestinian soil, and enforces their prescence with the military. Extremely harsh and racist treatment of Palestinians is common practice (Quote mayor of Jerusalem, "The only thing I built for the Palestinians is a drainage system, so they do not fall sick and spread the disease to Jewish people). The 'security' wall serves to cut off valuable resouces like water, which is already very scarce, education, and jobs. The purpose is to drive the palestinians out of their homes, so the land can belong to Israel.
Faced with such a powerful thug, what would you do? Talking to them has absolutely no use at all, since their aim is to basically encrouch as much land as possible. Past talks have been constantly undermined by Israel and US. And US vetoes all UN resolutions that so much as tries to bring about some change. No channel to talk, no hope of aid. So you resort to terrorist attacks, like launching rockets, and hope that your homemade device can explode and actually do some damage, like killing 3 people a year? In response to this 'vile' crime, Israel launches massive military strikes, even during cease fire periods (hoping to invoke a response which is used to justify more attacks), that kill thousands in days.
The palestinian leadership is ineffective as well, and intentfully rendered so by Israel and US. On one hand, a luxurious life is offered to the leaders if they choose to do US and Israel's bidding, like trying to pacify (by force if necessary) the starving, parched people evicted from their homes, whose father, mother and brother have been killed by Israelis. On the other, Israel and US blames these leaders for undermining the peace process, and supporting terrorism. All the while, Israel expands, and Palestinians suffer.
This expansion is obviously at the expense of Israel's security. All major muslim nations have agreed to peace if Israel keeps to its internationally recognized borders from the 1970s(a lot smaller than that it really occupies now). However, Israel treats this with disdain. Diplomatic 'solution' to a problem of their own causing is obviously not a consideration. Well, if Israel could negotiate its way to own palestine, jordan, egypt and syria, of course it would do so. But no negotiation with sane people could lead to the fulfillment of Israel's goal, which more expansion.
And Israel was once almost defeated by Egypt and Syria in 1973, and seriously considered nuclear weapons. But situation resolved without resorting to that end.
Of course, some people may instantly label me an anti-semitist, hitler etc. If condoning every single act of attrocity by a nation is not being racist, then everyone who criticizes what the taleban and saddam does is an anti musilm. Anyone who criticizes an american is anti-christian. Does not make sense whatsoever.
To address the claim that the Israelites are supposed to own Palestine: says who? A book? If I write a book that the world belongs Muslims, and that book survives a thousand years or so, does it give justification for muslims to conquer the world? What about the native americans who are already in the US before the colonialists came? Is it justified for them to take over the country?
The right to exist, which Israel claims, is absolute bullshit. No country in the world has that right. A nation exists because it happens to do so. In time, a nation will fall, either to internal forces, or external invasion. Similarly, a nation came into existence because it took over some land that another held. There is no right to speak of.