I think calling the Arabs genocidal or the Israelis Nazis is pointless. It is completely irrelevant who is to blame, except perhaps that blame is a weapon in the propaganda that is part of the war. What is relevant is that Israel exists as an outpost in a hostile sea, and if it starts falling back, there's is no stopping the retreat given the disparity in positions. This breeds a backs to the wall desperation among Israeils and makes them reluctant to make concessions to the Palestians to achieve peace.
The big problem with the Israeli Palestinian peace process is that it only makes sense for one side at a time. The Israelis would gladly take a peace that is permanent and confirms their possession of the land they currently hold, or even slightly less. But of the Palestinians, this makes sense only as a temporary solution, a means to get the Israeli forces away from them long enough for the Palestinians to regroup and prepare for the next phase of the struggle. The Palestinian goals, given all the factors favoring them, are a short term truce, the gain of as much terroritory as they can, to place them in a better position for the next phase of the offensive. Peace in itself is not a goal, except for short term respite, victory is the goal for each side.

This is the key mistake that outside peacemakers make going into the Middle East - peace in itself is just a platitude, somethign that sounds good, but it doesnt' satisfy anybody unless it is the peace taht comes after their victory. Otherwise it's just a ceasefire that will last until the power balance shifts a bit more. It is the sort of peace that the Americans would conclude with the various Indian tribes on their borders, a peace designed long enough for more settlers to move in and to get ready for the next phase of expansioin. Except in this case, the Indians are in on the game, they too push for peace to build up their strength for the next push against the settlers.