IMHO, It would be best for America to be assertive in its foreign policy. We should give the Arab countries two reasons to oppose terrorism:
1. It is morally right.
2. We intend to make life worse for our enemies than for our friends.
If they come back to us and say that we have to promise to resolve the Israeli-Palestinian conflict first, we should reject that demand. The two reasons are good enough.
Yasser Arafat is a master at talking out of both sides of his mouth--announcing cease-fires in English while encouraging the terrorists in Arabic. The "moderate" Arab states will play the same game with us if we let them.
At the height of British appeasement in the 1930's, Churchill remarked that England had to choose between war and dishonor. "We chose dishonor. We shall have war."
To sacrifice Israel to the Palestinian terrorists would be to go down the same path.