Michael Wiess at Foreign Policy has a fine description of the settlement project and why it's not remotely the reason there's no peace between Israel and the Palestinians. Alas, no one's listening.
Daniel Pipes has a long and well-footnoted article on Islam's historical connections and sometime lack of connections to Jerusalem. I"m not fully convinced how crucial this is, since no matter what Jerusalem's historical status in Islam has been, for the Palestinians it's the most important place they've got - even though I'm not in favor of giving it to them in the way most folks seem to suggest. Pipes rather demolishes the Arabs' claim to Jerusalem, but doesn't really deal with the Palestinian one. Anyway, I've not got the time to write about this today, nor about anything else, but follow the links and you'll learn stuff.