I'll start by saying that it doesn't matter what people say and what facts they quote. People will always believe what they want to believe and find a way to justify their actions.
Israel has an army that needs be able to defend Israel against more than just the Palestinians. I don't know where you are from, but as far as I know there is only one country in the world that doesn't have an army (Costa Rica).
There is no general problem with countries having nuclear power and weapons as long as they don't threaten to use it. North Korea and Iran seem crazy enough to use it and that's why you hear whining about it.
As far as I know, The Irish never used suicide bombings when they fought for their independence. They also aimed at military targets and not civilian ones.
Suicide bombings are used only by societies that value death more than life. That is one of the major differences between western cultures and extreme eastern cultures.
Before WW2 and after WW2 there weren't any countries (except maybe one) that wanted to take Jewish people. The world was split between the winning countries and the Brits decided to help the Jewish people by agreeing to give them a part of Palestine. Mistake or not, the UN accepted this and split Palestine. It is true that Jewish people lived in Palestine at the time, but they hardly bought half the country. They also didn't declare independence before they got the OK from the UN.
Once Israel declared its independence the Arab nations started a war which they lost. Losing the war caused the problem of Palestinian refugees. Note that the Arab nations doesn't want to take these refugees into their countries just like countries didn't want to take Jewish refugees after WW2 (one prof is that when Israel signed it's peace treaty with Egypt, Egypt didn't want to take back the Gaza strip that was originally theirs).
There is a long ongoing debate in Israel whether we should return any or all that we took in the wars with the Arab nations, but there is really no discussion about giving back parts of what the UN granted us.
I don't care at all about biblical stories and that "god" promised us this land. There are some extremist here that thing that it should all be ours. They are the ones that illegally build up settlements in Palestinian territories.
Like in any other country, we have extremist groups. They are a minority (and as prof you can see we used our army to take them out of the Gaza strip).
I am sure that the Palestinians want peace too, but their extremist control them (We also find it hard to deal with our own extremist).
If what you say is true, Israel would not have the support of the US. Despite the fact that international law says that if you hide your military in civilian population you are responsibility for the civilian casualties Israel doesn't bomb everything and everyone.
If Israel would bomb everything and everyone we would have a solution for the Gaza problem real fast. Gaza is a small enough area to just bomb it all with artillery and air strikes and remove it completely from the map in six hours. Extremist here probably support such action, but the majority and I wouldn't to add one more holocaust to the world.
When it comes to taking the risk of a few civilians getting killed on the Palestinian side or our side, we prefer our side lives. I'm sure your country will make the same decision. I am also sure that the USA killed civilians on its various wars.
---
To all those who call the Palestinians freedom fighters. If they were targeting military targets I would agree. Once they target civilian targets they are terrorists.
If it was up to me, I would give the Palestinians all that is theirs according to the UN split plan (to avoid conflict about Jerusalem I would make it a UN controlled international city with its own laws). However, the Palestinians want everything, including what the UN agreed to give Israel. Israel will never agree to give it because it will mean the end of it.
Also, the extremist from both side have too much control on the situation. On our side it means more settlements. On their side it means attacking civilian targets and not military ones.
As long as these extremist on both sides control the situation, the Israeli-Palestinian conflict will never be resolved.
http://sderot.aish.com/SderotPetitions/15Seconds.php
http://www.youtube.com/watch?v=t_B1H-1opys (old, but always relevant)