Israel is a well known Jewish state (in fact the lone Jewish State) right smack in the middle of several Arab nations. It was carved out of this seething mass of Arabs by the British and the United States after the Second World War.
I must admit my ignorance and lack of first hand experience with Israel (the lay of the land, the state itself etc.), with war itself (I haven't been in one and am not looking to get into one) and with the Arab states (I haven't been there, nor have I met enough people from the neighboring states to form a general impression of the people there).
At most I have met one Israeli back in 2006. We met in a Beijing mall. Our group of tourists/students sadly left our passports in UIBE. He willingly helped us change our USD in the nearest bank (the banks refused to let us change our USD for RMB without our passports). He seemed nice enough at the time so I know for a fact that not all Israelis are hell bent on destroying Arabs.
As for the Arabs and other nations, I've met just a few on business trips. Most are entrepreneurs seeking to buy equipment and technology from South East Asian nations etc. Some are looking to sell their nation as a top destination for tourism.
I guess on an individual level the opposing sides of the same coin are inherently good. Isreali and Palestinian both are human and both will therefore have their corresponding strengths, weaknesses and desires. It is at the collective level that we find the irreconcilable differences appear. It is at the level of nation or state that we find that the Israelis will not like co-existing with Palestinians and vice-versa. If you take a step back, however, you will find that the idea of a nation is a mere construct of our education, our different cultures and quirks. It is an idea that is commonly used to galvanize otherwise peace-loving individuals into a rioting mob. I think it was in one of my father's books that I was able to read on the notion of a meme. A meme is an idea that self-replicates by spreading through minds and being stronger than other memes in the "meme" pool. If we think of the idea of a nation as a meme, intent on self-replication, then we can uncover, partially at least, the problem of the never ending conflict. The idea that Israel is a nation for all Jews is so strong among the minds that it can attach itself to that these minds (hence the people that own these minds) would find that a meme or idea contrary to the meme or idea that Israel exists as a nation for the Jews would be threatened greatly. A meme to protect itself will use, at times, different memes to force the mind to act to preserve the meme. For example, the idea of God finds itself in a strong position because it reinforces the idea with the threat of hell. Like Austin's command theory this might be a crude way to enforce preservation but an effective one. So we find that there are probably two memes at least who are duking it out right now near Jerusalem, the idea of Israel and the idea of Palestine. Both ideas will kill each other (each seeing the other as a negation of the existence of itself) and in so doing kill the people that hold these ideas.
And now we find, hopefully, the tip of the conflict.
"A man may die, nations may rise and fall, but an idea lives on. " -John F. Kennedy
And we find it to be an enduring one.
(I'll try to scrounge up the citations for the meme book, I think it was the selfish gene forgot the author now though.)