For the geography governed by the nation known as Israel to be "a non-Western Muslim nation", a great deal of history would have had to unfold differently than it actually did, beginning more than a century ago. For intersted parties (and, lamentably, for those who insist in the certainty of their knowledge), I recommend this excellent 7-part audio series, "The Mideast - a Centurty of Conflict" produced by NPR News.

Quoting Theodor Herzl, acknowledged as the founder of the world Zionist movement (from the transcript of Part 1 of the series): The Jewish question exists wherever Jews live in perceptible numbers. Where it does not exist, it is carried by Jews in the course of their migrations. We naturally move to those places where we are not persecuted, and there, our presence produces persecution. This is the case in every country, and will remain so, even in those highly civilized -- for instance France -- until the Jewish question finds a solution on a political basis.

It may surprise some people here (not to mention in the real world) to learn that Herzl et alii did not focus on Palestine initially; any safe place would have sufficed. Eretz Yisroel (lit., the land of the tribe of Israel) became the goal only after a religious sentimentalism for "the Holy Land" was superimposed on the secular idea of establishing a safe haven.

Some points to keep in mind:

-- The "Jewish question" to which Herzl refers (a phrase repeated by many voices throughout history, before and after Herzl) was a Christian European question: "What shall we do with the Jews?". The common answer to that question is what Jews needed to escape from.

-- In spite of centuries of persecutions, Judaism (the religion and the ethnicities - there are two major branches of the latter) had survived and in some cases flourished in the Diaspora. In fact, they did best in countries with Muslim rulers (Spain, Egypt, Persia, etc.). By the way; in the 1980s, the Dalai Lama invited a number of Jewish cultural leaders to Hyderabad to try and learn from them how a religion and culture like his might also survive in exile.

-- The "Protocols of the Elders of Zion" are merely the best known example of a centuries-old tradition of anti-Jewsih perfidy promulgated entirely by Christian Europe. There are older, stronger, more insidious examples: more Jews were murdered, tortured and exiled as a result of the "Passover blood libel" than from suspicion of conspiracy. To a modern intellectual with an [ahem] liberal education, it's laughable that some Egyptian TV producers have latched onto the "Protocols" for inflammatory purposes. The problem, of course, remains that the ignorant are the most inflammable - regarding the Jews, European Christendom proved that long before Islam even existed.

-- From the point of view of the natives of Palestine, the Zionist settlers (mostly from Eastern Europe) were, and still are, invaders - even though the originals purchased the land they settled on. For other examples of how this condition affects the subsequebnt history of a territory, see Ireland, the Balkans, and the United States (especially, but not exclusively, west of the Appalachians).

Getting back to your alternate history proposal, Tom... Suppose "the Jewish state" had been established elsewhere than the Levant. There would be no Arab/Israeli conflict; the economy of the region would be dependent on religious tourism, and might likely wish to protect that valuable trade by exhibiting tolerance for minorities of all kinds.

Meanwhile, supporters of human rights - the folks you'd rather dismiss as "liberals" - would still condemn inhumane behavior wherever it is found. What the Arab world might have to say is another question - Arab rulers are, on average, quite conservative.