In Afganistan in the 80's we wouldn't have called them terrorists because they were going after military personell. If you're doing that you get to be an "insurgent" or "gorilla" fighter.

The one interesting thing in that article was the offer to keep the settlements in exchange for Israli land. I'm given to understand that some parts of Israel have very high Arab populations. So while it would make the borders stupid looking a swap might be in Israels interest.

As for supporting Israel I think the US should do that, but I think we should twist their arms some to get a deal hammered out.