So what really is the core of the issue with Palestine and Israel and Lebanon and Hezbollah? For some reason, this understanding has escaped most public discourse, and I guess no one talks about it because it's rather unfortunate and ugly.
The core of the issue isn't Jerusalem or religion. Certainly, Jerusalem has been the "flag" in a huge game of capture the flag that has been played between various tribes for millenia. But that's just the cover story, the sort of thing that inspires microscopic minds but is mere symbolism when it comes to virtually all action.
No, the core of the problem is that everyone...yes, Arabs and Jews alike...treat the Palestinian people as unwanted trash.
How did we get here?
Jews were treated as unwanted trash for millenia because they became a displaced people during the "diaspora" as Muslims and others took control over Israel. Scattered across Europe and elsewhere, they never really had full citizenship anywhere, and often lived in ghettos and faced deadly persecution. This culminated as we all know in the Holocaust where an effort was made to a "final solution to the Jewish problem" via genocide.
Started long before the holocaust and reaching fruition in its immediate wake, Zionism was the effort to secure the Jews a homeland by reversing the diaspora and returning the Jews to Israel. Problem was, plenty of non-Jews called the area home, and to establish a viable Jewish nation-state, those people would have to in turn become displaced. They are known as Palestinians and their own diaspora sent hundreds of thousands of them into many surrounding countries as well as refugee camps within territories now controlled by Israel.
The refugees don't practice much (any?) birth control, there is widespread polygamy, and the number of people considered Palestinian refugees now numbers in the millions.
And nobody, and I mean nobody, wants to deal with these people or normalize their status.
That includes all the Arab gov'ts as well as the Palestinian Authority itself.
Interesting sidenote
The Palestinians who are actually the best off are the group that are called Israeli Arabs. They don't have one-person-one-vote within the Israeli democracy that has constitutionally guaranteed dominance for Jews. But they do have a mandated representation in the Israeli Knesset, which is actually better democratic representation than most Arabs get in their own countries (one-person-no-vote). They also get to enjoy the benefits of living within the only really developed country in the region.
And Lebanon?
Lebanon has many Palestinian refugees living in camps. Like all the other Arab countries in the area, these people, many of whom were now born in Lebanon, have never been normalized as citizens. They are just refugees awaiting a "right of return" to Israel proper which they (or increasingly, just their ancestors) fled. They are thus kept in a continual state of displacement and as such form a festering thorn in the side of the region. There are even more of these in Jordan (indeed, 60% of that country's population) and there are plenty in Syria, Egypt, and other locales.
Nobody has any interest in them. They all want to dump them back on Israel but they all know that will never happen. This is why they keep demanding the "right of return" that is encoded in an early UN resolution (I think it's 191). Israel can't conscience such a return as it would demographically eliminate the Jewish state...Jews would become a minority within their own homeland. It is this demographic problem which is a major part of the motivation for the formation of the Palestinian state.
What about the Palestinian State?
The Palestinian Authority doesn't want to bring these refugees into their territories within Gaza and the West Bank either. They already have too many of their own to deal with, and they are too poor to care for them. So they too want Israel to take them. In this way the Palestine Palestinians are no better than other Arab gov'ts in addressing the problem of their own flesh and blood! But in their defense, they have far fewer resources to do so with.
Because the more pragmatic elements of Palestinian governance behave this way (not to mention with rampant corruption), the militant Hamas organization has been able to garner a lot of support within the refugee camps and even outside of them. They won a democratic election for the Palestinian parliament recently which only ended up cutting off most Palestinian foreign aid, as Hamas is a major terrorist organization of more recent vintage than the PLO it replaced.
Now, the situation
Israel has already determined its final borders and is unilaterally carving them up by creating a separation barrier and withdrawing its "settlers" from within future Palestinian territory. There are some issues yet to be dealt with but the hopes of a mutually negotiated settlement are past and getting paster with the election of Hamas. Israel doesn't want to care for Palestinians any more than sane Americans want to care for Iraqis. They want them to take care of themselves.
As soon as Israel's final borders are established (scheduled for completion in 2008 to ensure an American election doesn't complicate matters), the entire region will turn a corner that may be impossible to turn back. At that point, the issue may well be considered resolved by the international community, and the onus will be upon the Palestinians and other Arab gov'ts to make the best of their lots.
Since the inevitable is appearing imminent, the Palestinians and others feel a need to disrupt that progress in hopes of getting a better deal somehow. It doesn't appear likely, but the Hamas missiles and soldier abduction, copied in far greater scale a couple weeks later by Hezbollah at the Lebanese border, is intended to derail the Israeli program and blacken Israel's name in the world community. It hasn't, isn't, and won't work, but that is what they are down to.
What's going to happen from here?
Israel will respond to the attacks with enough force to be effective but not so much as to actually play into the plot against them. It will return to a stalemate, effectively, and Israel will go back to constructing its fence.
As soon as the fence is constructed, much of the discussion will shift to whether the Palestinians will have a viable state and authentic sovereignty. The answer to those questions is not entirely. The Palestinian state will be, ironically enough, a protectorate of Israel. Israel will ensure that it never has heavy armaments (if you understood just how small Israel is, that it's only a dozen miles wide in places, you would understand that they simply can't live securely in those close quarters with people who feel they have a score to settle being heavily armed).
Furthermore, the Palestinian state will be almost completely dependent on Israel economically. What most of the Palestinian economy will consist of initially is serving as a labor base for Israeli business. Because the Palestinians are willing to do this work (they've been doing it for decades), they will be able to bootstrap themselves economically much like Taiwan, Korea, China, and Mexico have. Ironically, because surrounding Arab countries are less willing to call Israelis "boss", the Palestinians may actually develop faster than the surrounding countries. Much hinges on whether the Arabs are too proud to call Israelis "boss" or "teacher" or whatever; the Israelis have brought from the countries they came from an advanced economy that could enrich the entire region if they are.
How could these attacks be worth it to them?
Pride and humiliation drive much of the Arab mindset in the region (as they do everywhere of course), and the surrounding countries are humiliated by Israel's vast military and economic superiority achieved in just a handful of decades. With final borders and a Palestinian gov't that itself refuses to accept the refugees, and waning support for any "right of return" effort, the surrounding gov'ts will have to face their own refugee questions and eventually normalize their status. They will try to blame Israel for all their problems, and direct frustration in Israel's direction.
To an extent, they will be correct. The Zionist project was like a "Wild West" situation right in the middle of the 20th century: land was grabbed and natives dispersed or killed. This is a terrifying development, that your homeland could be colonized. It's been their primary concern for decades as a result. To their credit, they have made it so painful that it's unlikely such an effort will ever be repeated (although our neocons, fundies and the Israeli far right would like Israeli expansion and further "transfer" of the Palestinian populace).
However, given the vast military and economic disparity of the situation, the end state I've described is inevitable and going along with it is the best the various players can do with their hands. Hamas and Hezbollah succeed in crystallizing the rage and humiliation by attacking Israel, but those fleeting moments of pride just give Israel the opportunity to set their economies even further back, with over a billion dollars worth of damage this week alone.
And that's the way things are.
You might hate the facts on the ground for your own reasons, but at least having read and understood this, and any accurate corrections and elaborations we will be fortunate to receive in the comments below, you won't have ignorance as an excuse for the basis of your argumentation going forward.