The whole Arab-Israeli thing is a mess. I don't understand what the US thinks they're gaining - as you say, using Israel to further their aims in the Middle East does nothing except foster more anti-American feeling in particular and anti-western more generally.
I should get around to looking into it a bit more.
Israel's black and white view of the political implications of 9/11 and the prospect of Iran getting the nuclear bomb certainly seems to fit in well with Bush and his administration. It's also quite interesting to note the differences in the approach taken by Bush and the previous two presidents at least - almost as if Bush views Israel as a tame rottweiler in the region who can do a lot of the dirty work on the supposed war against terror.
I'm going to try to find a book on the history of this - I'm interested to know why the US seems to have this weirdly skewed idea of the rights and wrongs of the situation.