I was reading last night about the conflict between the Jews and Romans when Jerusalem was attacked by Titus around 70 A.D. As I already mentioned, the Jews formed part of a Roman province in the Middle East.
Certainly then, the Jews were based on this same piece of land way before the Palestinians and Islam became a factor to bear in mind.
I don't really see why the Jews should severe their historical links in the Middle East to accommodate the Arabs and Islam - a belief system that never even existed in the first century A.D.
Also, given the number of Arab countries already based in the Middle East, it makes more sense to me to accommodate the Palestinians throughout these countries.
Much of the problem, of course, is linked to religion and culture. The whole history of Israel and Christianity is tied up in the Middle East. European and American Christians travel to Israel in order to experience this history for themselves. Moreover, being a deeply religious country, the U.S. also has a conception of preserving the history of Israel (the biblical land).
Realistically, I don't imagine Israel will ever abandon their present geographical location to accommodate the Arabs.
The militaristic stance Israel adopts is basically down to the reality of the situation after millions of Jews were murdered in the second world war.
The last point is that despite anti semitism in the world at the present time, Jewish influence is quite strong in American and European culture. Were it not for the Jews there would have been no Orthodoxy, Catholicism or European heritage. Western culture has mostly been influenced by Greek, Roman and Jewish cultural influences and all of these come way before Islam ever entered the scene.