OK, I'd like to weigh in here. I'm a Jew on both sides of my family, and a liberal as well. Here's how I see it: both sides' views are fundamentally flawed. I think that the only viable solution is two states, with a shared (perhaps internationally and neutrally monitored) Jerusalem. It is a disgrace indeed that the non-Jewish occupants of what became Israel after 1948 are treated as third-class citizens by the government of Israel, but Ariel Sharon is NOT Israel. The militant Jewish settlers on the West Bank are NOT representative of the Israeli people and they certainly don't speak for the majority of Jews worldwide. But the Likud is terrified of the fanatical religious right (gee, I wonder whether another reactionary political party on this side of the pond is too?) and keeps sucking up to them in the Knesset to keep a shaky and spurious "coalition" going.
But sorry, folks, the State of Israel has a right to exist in some form in the Levant (I hate to use the term "Palestine" or "Palestinians," because they've become so fraught with connotations beyond any geographically correct description). The Jews were expelled centuries ago by the Romans, the early Christians, and the post-Mohammed Muslims alike---and no less unfairly than what happened to the Arab occupants of the area since 1948. Whereas Islam has spread freely throughout the world, Jews have been chased for millennia from country to country and persecuted and exterminated by the *millions* for no other reason than the insane and unjustified threat our ethnicity posed and poses to the majority peoples of our "host" countries. The Holocaust does not give Israel the right to oppress other peoples, but a majority of members of the United Nations felt it did justify the creation of a nation where Jews would be forever safe--in the land from which we were unjustifiedly expelled.
I think the most cogent and sensible viewpoint on this issue is expressed by the NY Times' Thomas Friedman: Israel has a right to exist in its Biblical homeland. Muslims and Arab Christians have a right to exist there too. But each group must have its own sovereignty. Israel is not going away, and it is insulting, simplistic and racist to insist that 1948 should never have happened and that we should all go back to Europe. But it is also insulting and paternalistic to treat the Arab population of the area as less than human. Israel must retreat to its pre-June-1967 borders--BUT it must be allowed to be safe and secure there. "The Occupied Territories" of the West Bank, Gaza, and Golan must be returned and the Jewish settlements dismantled--this gives Israel a terrifyingly narrow buffer, but it beats having no state at all. And the notion that all of Israel is an "occupied territory" is equally ludicrous, insulting, and racist.
I don't know where you've been getting the idea that Israel wants to expel all but Jews from the land--I repeat that the right-wing loonies of the Likud and Shas parties do NOT speak for the majority of Israelis. But it is undeniable that even mainstream Islam and Islamic states have as a goal the dismantling of any Jewish state and not just the expulsion but the extermination of Jews from the Levant. Take a look at magazines, maps, globes, and even official textbooks in the Muslim states and the territory under the aegis of the Palestinian Authority: not only are Jews caricatured as in the most venomous anti-Semitic propaganda of the Nazi and pre-Nazi eras, there IS NO ISRAEL on the maps and globes.
I am heartsick that my fellow progressives are so eager to swallow the anti-Jewish hate propaganda spewed by militant Islam (perhaps because it has a better and more vocal and determined PR apparatus--for instance, that infamous killing of a child in his father's arms at the start of the Intifadeh was finally proven to have been accomplished by Palestinian, not Israeli bullets, but that fact received far less press than the original spin). Face it, David is a far more romantic and appealing figure than Goliath. But the underdog is not always automatically right just because he's the underdog,
Finally, let's not kid ourselves that the Bush Administration has any altruistic, pro-Jewish motives in supporting Israel. Fundamentalist Christian end-times theology (to which most of the Bush Administration's core of power and support subscribes) requires a Jewish-held Holy Land in order for the second coming of Christ at the End of Days--and thereafter, everyone who does not accept Jesus will be destroyed. Gee, that gives me the warm fuzzies.
It's so tempting to say, a pox on both (all three of?) their houses. But the only way out of this mess is to give each side the dignity of its own secure sovereign state, however unsatisfying to each. As an attorney, I know I've engineered a good settlement when each side feels equally screwed.