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Israel does NOT ban Muslims from coming to or living in Israel,

Important Travel Information

U.S. citizens planning to visit the region are encouraged to note the following important developments:

Palestinian Authority Areas-Only Stamp. Anyone indicating at the Allenby Bridge-King Hussein border crossing that he or she has connections to the West Bank or plans to travel to the West Bank may be given an entry stamp that permits travel only in Palestinian Authority-controlled areas of the West Bank. This stamp does not permit such travelers to enter Jerusalem or Israel. Travelers who have received such a stamp may file an appeal with the Israeli military's district coordination offices in the West Bank, but appeals are rarely approved.

Palestinian-Americans Must Enter Through the Allenby Border Crossing. The Government of Israel does not currently permit U.S. citizens with Palestinian nationality (or even, in some cases, the claim to it) to enter Israel via Ben Gurion International Airport. Many travelers have been sent back to the U.S. upon arrival. Others have been allowed to enter Israel but told they cannot depart Israel via Ben Gurion without special permission, which is rarely granted. Some families have been separated as a result, and other travelers have forfeited expensive airline tickets. If you believe that you may be affected by this rule, confirm with the Israeli Embassy in Washington before departure that you will be able to enter and depart through Ben Gurion. You may prefer to alter your travel plans to enter via the Allenby-King Hussein border crossing. Denial of Entry into Israel or the West Bank

The U.S. government seeks equal treatment and freedom to travel for all U.S. citizens regardless of national origin or ethnicity. Even so, all persons applying for entry to Israel and the West Bank are subject to security and police record checks by the Government of Israel and may be denied entry or exit without explanation. U.S. citizen visitors have been subjected to prolonged questioning and thorough searches by Israeli authorities upon entry or departure. Those whom Israeli authorities suspect of being of Arab, Middle Eastern, or Muslim origin; those who have been involved in missionary work or activism; and those who ask that Israeli stamps not be entered into their passports may face additional, often time-consuming, and probing questioning by immigration and border authorities, or may even be denied entry into Israel or the West Bank.

While the U.S. Consulate General cannot facilitate U.S. citizens' entry into Israel or the West Bank, those who feel they have been wrongly denied entry or unnecessarily subjected to additional security screening should report their experiences to our office or to the American Citizen Services Unit of the U.S. Embassy in Tel Aviv. The Consular Section of the U.S. Embassy should be contacted for information and assistance related to ports of entry at Ben Gurion Airport, Haifa Port, the northern Jordan River-Sheikh Hussein and southern Rabin-Arava border crossings connecting Israel and Jordan, and the Taba border crossing between Israel and Egypt. The Consular Section of the U.S. Consulate General in Jerusalem should be contacted for information and assistance related to the Allenby Bridge-King Hussein crossing connecting the West Bank and Jordan.

http://jerusalem.usconsulate.gov/entering.html

Certainly doesn't sound like they don't care what your religion or nationality is either when they're determining where in Israel you can even go, eh?

The only difference is that Israel is a Jewish state, so in order to apply for citizenship, an immigrant must have a Jewish spouse or ancestry.

Mmmhmmm. So what's worse: having an immigration policy that favors a particular race and which makes it really difficult if you are a Muslim to travel in certain areas.

A temporary bloody moratorium on Muslims!?