How do you fight a war on terror? Really?

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I posted this last night on Digg and was curious what everyone's comments on it would be. Bear in mind I was talking to a jingoist idiot at the time.

What does the village down the road see when an American army unit goes into a terrorist stronghold, blows up their weapons cache and shoots the sons of bitches? They see American uniforms killing Arabs, which just goes further toward recruiting MORE terrorists. All military power can do is serve as a bare, temporary stopgap.
The reasons and excuses for Islamism - poverty, lack of education, the Israeli occupation of Palestine - have to be addressed directly instead of just putting bullets in the heads of psychotic religious whackjobs. America's foreign policy needs to change. There needs to be less militarism in Iraq and more economic groundwork. Israel needs to be convinced -- however necessary -- to retreat to their 1967 borders and share Jerusalem with the Palestinians. If real peace progress can be made in Israel, the entire reason terrorist organizations have for existing will start to fall apart like a house of cards.
"How can you say we must fight the Americans when they have convinced the Jews to stop killing our brothers in Palestine?" This is what we must get people in the Middle East to start saying each other if we ever expect to win the war on Islamism.
Lack of education, religious indoctrination and poverty is not "their fault" anymore than it is your fault that you were raised in the most privileged country in the world. The question is whether or not you want the entire situation to stop. This is not about "tough breaks." It is not about picking yourself up by your bootstraps. It is not even about whether or not the occupation is right or wrong. It is about the answer you get when you sit down and ask yourself "do we want one more Israeli to die because of this senseless idiocy?" And -- think about your answer to this one very hard -- "do we want one more Palestinian to die because of this senseless idiocy?" What is in the best interests of the Israelis? What is in the best interests of the Palestinians? What is in the best interests of the United States? As long as this conflict exists, the United States is in greater danger than it needs to be.
How do rabid killers get to be rabid killers? How do you stop them from becoming rabid killers? How do you get the extant rabid killers under control? Those are the questions to be asking. Not "Jews killing who," the answer to which is COMPLETELY MEANINGLESS. The point is not whether or not the Israelis are judicious in their responses to attacks. ANY response to an attack is viewed as terrorism by the entire Arab world.
Get this through your head: EVEN IF THE ISRAELIS ARE RIGHT, IT DOESN'T MATTER. It doesn't matter who's "right" or "wrong" anymore. All that matters is ending the damn thing.
Make the Knesset sit down and realize the bunker mentality is getting them nowhere. Engage in a massive effort to establish lines of communication with every faction of Hamas at the same time as you find real ways to win the "hearts and minds" war with the Palestinians. Broker a peace, and carve out a spot for the Palestinians who currently have no home at all to speak of. That is the only way this thing is going to end.
We cannot win the war on Islamism the way we won the war on Naziism. There is no Berlin to roll tanks into. There is no Hitler -- if you really think Osama is like Hitler, you're fooling yourself. There is no leader of the Islamist movement. The entire process of brainwashing and radicalizing people has been decentralized. There is no regular army to fight against, there is no Luftwaffe, there are no strategic maps to look at. There is no Blitz. We are talking about a war of information that results in constant tiny-scale killings that add up to a big conflict, and the occasional high-profile terrorist attack. You cannot win this kind of war with bullets. It can only be won by showing the people that are being radicalized that -- and this is CRUCIALLY IMPORTANT -- our way is better than their way.
It's a little disorganized, but I hope it gets my point across.
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