Comments on some statements (I've moved a couple of your sentences around...apologies if I screwed up a line of thought):

Israel pre-emptively attacked in 1967. It was not a defensive war.

There is obviously more than one school of thought on this...here's one from the Israeli viewpoint.

Israel's occupation of the captured areas has been brutal by any reasonable standard.

Although there have obviously been abuses, Israel treats Arabs and Palestinians typically with more reasonableness than most Arab nations treat their own citizens.

The offers Israel made were in the context of continued, and even accelerated, expansion of Israeli only settlements...Israel has systematically used the settlements to subdivide the West Bank territories...

The whole West Bank settlement concept has been a mistake from day one. It not only unnecessarily aggravated the Arabs, but tended to concentrate the most extreme factions of Israelis into these very settlements. If Israel was worried about the defense of the West Bank, it should have placed simple military installations there, which although still a thorn in the Arab side, would not have the same tint of colonialism. In addition, a military garrison could be easily abandoned for a treaty or some other political gain, unlike a settlement full of radical Jews who consider it their home.

Sharon did a lot to precipitate the current ugliness with his strumpeting around the temple mount area.

If somebody strutting around a site precipitates a war of terrorism, then someone is being a little too sensitive, or maybe was looking for trouble in the first place.

If either side would for just awhile walk a path of reasonableness without assasinating the leader of that walk, so much could be accomplished.

You said a mouthful there, but I'm not holding my breath. What Rush is saying, and he may just be in a pessemistic mood, is that he sees no permanent outcome to settle this mess except the total defeat of one side or the other.

A really big Jewish problem in Israel is the fact that in about 20 years, there will be a lot more Palestinians living in the area than Jews. Demographics are profoundly against the long-term viability of the Jewish state.

Considering the supposed hard-line brutality of Israel against its Palestinian residents (see first statement), this seems a bit unusual. One would almost think Palestinians preferred living in Israel to living in Jordan, Egypt, Yemen, Saudi Arabia, Kuwait, or any other Arab country supposedly sympathetic to their plight. Maybe Israelis go out at night, and drag Palestinians from their homes in Jordan and drag them into Israel.

...The PLO/Palestinian problems and culpability are huge:
terror training the kids from birth to be willing to commit suicide attacks, a corrupt governance by Arafat, a complete inability to provide basic services efficiently (water and power).
A lack of real democracy in the Palestinian areas is another big problem.

Israel is a thorn in the side of the Arab nations, and Palestinians are used as the cannon fodder in this war, largely because Arabs want it that way.

Anyone who is still living in a "refugee camp" after two generations is being kept there on purpose, and the squalid conditions are also deliberate.