@Foofie,
There is no doubt that the Israelis have created a very effective society with a uniquely vibrant, creative economy: they have a great deal to offer their neighbors and the region - if they can begin to deal with each other as equals. The Palestinians,and Lebanese as well, have a tradition as merchants and entrepreneurs - many of the bankers & businessmen in the growing economies of the Emirates in the Persian Gulf are Palestinians. I believe this suggests the enormity of the wasted potential attendant to this prolongued conflict.
Struggles such as this one tend to magnify the differences between peoples and suppress recognition of their similarities, common interests and potential. Worse, they tend to bring the most retrograde zealots on both sides to the fore, suppressing more reasonable voices and the potential influnce of mutually beneficial opportunities that are wasted.
The Moslem world has had a couple of rough centuries in its dealings with the west, and a moment's consideration of their perspectives is worth the effort.
France began its conquest of North Africa and the Magreb in the early 1830s - perhaps an attempt to make something of Napoleon's earlier adventure inn Egypt. They ended up with everything from Tunis to Morocco. The British bilked the Egyptian Government out of ownership of the Suez canal in a fradulent stock scam in the mid 19th century and then used it as a pretext to create a protectorate there and later in Sudan. The British and French together actively conspired to force the Ottoman Empire into the World War in 1914 and wasted no time in launching their attack on Gallipoli (where they were defeated by none other than Mustafa Kemal), and incite (and finance) an uprising by the Arabs of Palestine, Mesopotamia and noirthern Arabia against the Ottomans, promising them self determnination and self-rule under their own leaders after the war. Meanwhile the British were setting up their own protectorates in Kuwait, Bahrain and Persia at the sites of the initial petroleum discoveries; and working out a deal with the French (the Sikes Piquot treaty) for the post war division of the Ottoman Spoils (the French were to get Syria, Lebanon and Mosul (northern Iraq) and the British all the rest.
After the war the British forced the abolition of the Moslem caliphate in Turkey to facilitate their own rule of their expanding empire. Meanwhile the Arab leaders discovered, during the Paris negotiations leading up to the Versailles treaty, that the British promises to them had all been forgotten and even that Palestine had been separately promised by the British to European Zionists - just months after the same promises had been made to them and by the same leader (Lord Balfour).
So the answer to your speculation is - yes the European powers did a great deal to fuel the power keg in the Mideast even before the first Jewish settlers arrived. It might have been possible to work out a peaceful transition in normal conditions, but after the ravages of WWII, the Holocaust and the massive displacement of surviving European Jews (often not welcome back in their former homelands), it wasn't realistically possible. The Arab leaders saw the return of the French Army to Lebanon, Syria and the Magreb (after sitting out WWII); the reinstallation of their former British masters in Palestine, Iraq and Egypt; and a wave of desperate European Jews descending on Palestine. Not surprisingly they became a bit Xenophobic.
As you know, I mostly (and very seriously) fault Israel for its unwise, unjust , and counter productive policies after the 1967 war.
For the Europeans who now so lavishly criticize both Israel and America for our often inept and occasionally selfish and unwise behavior, I have only extreme contempt. Europeans appear to sincerely believe they were reborn with the European Union and washed clean of any responsibility for their many past sins - apparently convinced that, after throughly ******* up the entire 20th century for the whole world they have been appointed the judges of us all.