The Ottomans controlled Palestine for about 400 years, and by "controlled" they had the same approach as most successful empires- let the locals govern and if anyone gets real out of line handle it. Most of the issues with the Ottomans were outside of that region. I've got an old Bible commentary by Albert Barnes (I think) that describes the region of Bethlehem as a place where everyone was living in peace. The way I think of it is like this- we've got all of these people saying the south is racist, whites and blacks don't get along, but that's not really true...everyone is kind of on the same level (poor) so race and religion don't become much of an issue. That's how Ottoman Palestine was- a backwater of farmers that had been there thousands of years.
Arab independence movements didn't start up until the late 1800s and early 1900s, and by what I understand, didn't hit full steam until the opportunities presented by WWI, when the British made promises to Arabs and sent support to fight the Ottomans (think Laurence of Arabia). Things got really heated afterward because the British then turned around and promised certain wealthy families in England and Europe a piece of the pie in Palestine after making the same promise for the same land to the Arab independence movement. The British then made it worse by doing a spectacularly ****** job moderating the situation, and suddenly we end up with a powder keg that erupted at places like Nabi Musa.
The reality is for as much as we want to say this is a 10,000 year old conflict, the stuff we're seeing in Palestine isn't necessarily that old of a fight. Wars have been happening between humans for eternity and in all parts of the world (have you ever looked at the wild numbers ancient Chinese historians throw out, or the causes of those wars?), and Islam is only 1400 years old. I'm more inclined to believe a lot of this, historically, was resource-based (limited fertile areas there), but if someone wants to make some kind of racial argument about all the people there, that's on them.