Israel: evil or moral?

I read an interesting article an Ha'aretz today. Here's the Hebrew version, and here's the English translation. - didn't find an English version yet (anyone who finds it - please let me know).(Thanks Lisa)

The article says that the IDF has appointed an officer to investigate why the a major Hebron street (the Shuhada street) is closed to Palestinian pedestrians since 2000. It is open to Jewish (i.e., settler) traffic, by the way. The IDF has claimed this is a mistake that will be rectified, but so far this hasn't happened.

I think that the title of the article reveals much about the Israeli state of mind regarding Palestinians. The article says "The street was closed to Palestinians". If the Israeli grasp of Palestinians was "humans of equal rights", I suspect that the article would have talked about "Palestinians being barred from entering the street".

To all Israelis who think Israel is pure, just and moral: think about this.

So if Israel isn't pure, just and moral - is Israel evil? Of course not. If Israel was evil, this article would not have appeared in Ha'aretz. Organizations like the "movement for civil rights" would not have approached the courts, the courts would have not summoned the IDF to respond, and the IDF would never have considered lifting the restrictions.

So why do Israelis grasp Palestinians as lesser humans? Is it because of the many years of bloody conflict? Is it because Palestinian society is so far behind Israeli society? Does it have to do with most Palestinians blaming Israel for everything that's wrong with their condition instead of taking some responsibility? Is it because the interaction between Israelis and Palestinians is limited to Israelis hiring Palestinians for jobs Israelis wouldn't do? Is it something else?

Is there a way out?