As long as both sides are so attached to their religion, and even want to kill themselves for it, we will never see the end of this. It is so simple; just give up religion as a part of the state sponsored programs. Having a secular nation is "good" just look at America, and Europe, people of all faiths coexist.
If the US continue to disregard the heat and hate of religions as a big part of this, we will be fooling ourselves thinking of peace. The only way out is FORCE THE ARABS AND THE ISRAELIS to give up their drive to push their religions through the state governments. Preferential treatment is never good, and will never contribute to harmony among people. At least Israel has Arabs in their legislation body. I don't think there is single Jew in any Arab government.