Building Mosques in the Middle East is protection money, Danegeld. If you pay the Danegeld, you’ll never get rid of the Muslim. The embassy attack was just a show of force.
Arabs hate westerners because westerners have shown them how backwards and impotent they are, so they strike out in anger however they can. The Israelis flourish and thrive where they could barely eke out a living, compounding their sense of inferiority and frustration.
Arabs fear modernization because modernization empowers women. It is said that Osama bin Laden became radicalized when an American woman laughed at him when he was playing polo. (He probably had a thing for her.) He used religion as a pretext and channeled his rage at the west and modernity.