I'm a little late to this party, but this was one of the better and more balanced posts I read. I do have some comments, and a question.
Through the 1920's, Jews and Palestinians lived relatively peaceful co-existence in Palestine under British Rule (where the Jewish Population was roughly 10%).
Is that 10% number for all of the Mandate of Palestine, (this would include Jordan), the biblical border of Israel, or within the green line border?
In any case, from the Palestinian point of view, it certainly seams that they were kicked off their land after an influx of Jews. However, what is always ignored in these discussions is that a similar number of Jews were kicked out of Arab countries (and into Israel) following the formation of Israel. A more regional point of view would say that the Jews and Arabs simply separated their populations. The Jews welcomed their brothers, while the Arabs told their brothers to rot until maybe one day the Arabs can take back the land that they were forced out of (and that all Middle Eastern Jews were forced onto). Remember, for nearly 20 years after Israel was formed, the Gaza Strip and the West Bank were under the control of Egypt and Jordan.
But, as you said, the Palestinians were kicked off their land in a war and naturally they want it back. They could care less about the Jews that may have been forced out of Arab countries. They are indeed victims in this. I, however, disagree that Israel is on the wrong side of this. I don't blame the Jews for wanting a safe place, and fighting for Israel. Particularly, after what history has done to them. As you said, the Jews wanted a safe place place to call their own, and that necessitating taking land from someone. Unfortunately for the Palestinians, they were that someone.
Yes, I get your analogy about fighting to take back Missouri if it was taken away. But you know what? The Palestinians aren't the first refuges to occur on this planet, and they won't be the last. Can't we just find a way to make their lives better and move on. If you were to fight for Missouri when you have no realistic chance to win, instead of looking for a better life, I'd think you were idiot.
The Palestinians can either continue to beat their chests, and try to make Israel miserable. (Which will just make themselves even more miserable). Or, they can try to put this behind them and try to create the best future they can for themselves. Yes, Israel doesn't make it easy for them, and they may feel they are entitled to more. However, like it or not, Israel is stronger than them. They'll likely only be able to prosper in the future with Israel's help. Call me crazy, but I think Israel is much more likely to be helpful if they stop calling for Israel's destruction.