I'm an American Jew that recently went to Israel. I had the good luck of leaving about the day before the rockets started coming in by the 100s. It seemed quiet and then exploded the day I left. Anyway, I would like to point out that while in Israel I saw many good signs as well as the bad signs for a day that Jews and Muslims could live together at peace. In one of the large cities of Israel, either Jerusalem or Tel Aviv-Yaffo, my group (all Jewish, the tour guides Israeli) went to a falaffle resteraunt. The people who ran the resteraunt were Palestinians, and they were very friendly and sociable in addition to serving the best falaffle I have ever eaten. In addition, my group went to a Bedouin encampent to spend the night. The Bedouins are a very polite and had great hospitality. Also, these Bedouins were concerned about the first Israeli that kidnapped. They worried it was a relative of their's, a Bedouin who had volunteered in the Israeli Army (Bedouins can volunteer to be in the IDF and Druze are required{the Druze wanted this} and the Bedouins are often employed as scouts due to their skills at Desert survival.). Anyway, I just wanted to show examples of Muslims living in harmony with Jews in Israel. Its not completely hopeless, though the rockets are not helping right now.
PS: I will soon be doing a post on my visit to Israel, eventually including pictures also.