I think your assessment is relatively accurate.

The only other thing missing to understand how fundamentally different the beliefs, values, culture, and customs of the people living in Israel are from those living in the Palestinian territories.

Without debating how we got to where we are the westernized Palestinians and Christians living in Israel do not want to live under Palestinians rule. Israel is on longer Palestinian, nor has it been for three generations, nor was it Palestinian for most of its history.

An equivalent is western Poland, which for most of history was occupied ethnic Germans. Like the Palestinians, the Germans were moved out to make room for Poles who lost their homes to Russia when it seized parts of Poland for itself. That land is now Polish, we are not going to wind back the map. Within 20 years, there will not be anyone living who will remember when Israel was part of the British Protectorate of Palestine.

The people living in Israel do not want to live under Palestinian rule and so absent a two-state solution that both sides embrace, there will be no peace.