Thank you, you are right. I erroneously used the term Palestinians to refer to those who live in the West Bank, as those who live west of the Green Line identify more with Israel than with the PA or formally PLO. I've never had opportune to have a good discussion with Gaza residents, unfortunately.
You are right that the Christian and Muslim citizens of the West Bank (I'll just say Palestinians in interest of brevity) do _not_ enjoy the full benefits of citizenship, and are in fact treated poorly by the state compared to their Jewish neighbors. I'm one of their Jewish neighbors (I live in the West Bank) and we see it daily. However, these people (from what they tell me) do recognize that even with Israeli-imposed curfews e.g. on Yom Kippor, and restricted rights compared to Jews, they still live better than their brothers in Jordan and other Arab states. They drink cleaner water, have better job security, better health care, better education, better chances to improve the livelyhood of their children, and so many other advantages compared to Jordanian, Syrian, or Egyptians. This is coming from them, as I always take an opportunity to ask.
Of course, I would love to see them enjoy the same rights as I do. I don't see them as competition, rather I believe that we both flourish together when we cooperate. But even without all the benefits of a Western-style democracy that the government _could_ provide to them, they still prefer that government to the alternatives that they see right next door.