There are a number of points that I'd like to bring out. First, are the Israelis really keeping the Palestinians in poverty and subjugation? This seems to present a point of view that there is no other way for these unfortunate people to find peace, happiness, and prosperity. But there are other ways — many other ways. Holding onto a dream of murdering all the Jews to reclaim a land that they believe is theirs, the Palestinians have put themselves in a box. Sure it doesn't help that Israel isn't handing them what they want, but there are other ways. Add to this that the entire Arab world, including Iran, remains indifferent to the Palestinians and merely uses them for a war of proxy and to further their propaganda against the West.
Next, you wrote: "It should not be hard to understand their logic — it is only hard to accept that humans are capable of being driven to this. " Yes, this is true. Logic dictates that being hurt is not acceptable and something must be done to murder the oppressors. But sanity dictates that murder, rape, decapitations, religious fervor, and torture of innocent Israelis (and others) are not the way to help.
Next we come to a point that is foremost on the minds of many Jews and Israelis, which is that one cannot make peace or acquiesce to a people who openly state that once they get the upper hand they will kill all Israelis and Jews in the territory. How can you begin from this irreconcilable premise? You cannot.
Next is the issue of world opinion. Even as the hostages who are still alive are suffering horribly, the left is crying about the pain and suffering of Palestinians. The left has bought, hook, line and sinker, into the propaganda of the Arab world that Israel is the aggressor even as they are being attacked. This has been going on since Day 1 of this conflict going back many decades.
Also ignored is the way the Arab world — the ones crying for equality and fairness — has systematically ethnically cleansed their lands of Christians, Jews, Bahai, and Zoroastrians. No Jews live in the Muslim lands, yet Muslims are crying that Jews should share everything with Muslims. It's a ridiculous premise that is just ignored by the press.
The problem of Israel and the Arabs is one of infinite regression, or cause-and-effect so that we can point to this one event in 1947 that led to this other event, and on and on until the present day. None of this does much good in the scheme of things. None of this solves the problem. But as long as the Muslim world promises to murder all Jews in the region once they get what they want, there is no road to peace.