Cal basically says that the Arab world, or more accurately the Muslim countries do not want peace with Israel. That peace could only be a possibility if the Muslims suffered more bloodshed than they can tolerate. Much like what had finally brought Sadat to seek peace with Israel. Sans that, anything offered will result in a short lived peace with Israel until Islam is the only religion standing in the region.
At the same time though they are invading other non Muslim nations where they are receiving little to no resistance in eliminating other religions in those lands since most have abandoned religion for secularism. Mainly because they smugly believe that nothing can overtake their sacred secularism.
The reason I would disagree with you here is that there is no level of Bloodshed that the Palestinians cannot tolerate. Relative to the loss of any piece of land. If 20 or 50 or a couple hundred rioters are killed as a result of these riots, they have shown that this is nothing that they are not willing to expend. It does not register on the same scale with them as the loss of land. And like it or not, to them this is a loss of land. And Justified or not, this appears as a loss of a piece of Holy Land. Now the importance of this move is important in a longer-term historical context because they may or they may not come to realize that their behavior engenders the loss of land, and that is the only equation that they will ultimately weigh in the manner that you are I would weigh some sort of sacrifice. The loss of a few dozen youths to them isn’t anything.