1. I see what you're getting at here and I've heard this argument before.
Israel was always intended to be a Jewish state. This isn't racist, you have Arab states, French states, Spanish states. It's totally normal for similar people to flock together and try to establish a state. That's why most Chinese people are in China, most French people are in France etc.
The reason Israel doesn't extend citizenship towards Palestinians living in the West Bank is because there's 2 million of them and they would have significant voting power in upcoming elections which could lead to Israel following a path geared towards the best interests of "Palestine" rather than its own.
If there were less people I have no doubt Israel would extend citizenship to those who would accept it.
So yeah, it's a Jewish state and a democracy. For the Jews though. Not the "Palestinians".
2. The west bank isn't even a country dude. There's no border control of any sort, the government frowns upon settlers like the ones you described because of the unnecessary tensions they cause but they don't typically do much to stop them because they may lose the vote of those settlers and those who support them (not all settlers are crazy I might add). Many settlers live in the West Bank because it is much cheaper and most of them try their best to live in peace with the "Palestinians" living there.
3. The IDF is without a doubt one of the most ethical armies in the world. You're going to hate me for saying this but I don't care.
I can't think of any other army that would phone residents of an area they are going to be bombing and tell them to evacuate as they did in the Gaza conflict over last summer.
The "Palestinians" are mad and I get why. They're denied many rights that I (as a Jewish foreigner) receive despite living in (or at least near) Israel all their life.
But too often, "Palestinians" I met are radicals like you who refuse to consider both sides of the equation.