The biggest problem for Israel is that there is but a fine line between Palestinian terrorists and innocent civilians. The very same innocent civilians become terrorists when they strap on their explosives belt. So how do the Israelis know when they've defeated terrorism when the terrorists are part of the "innocent civilian" population? New generations are standing in the wings; indeed, those younger generations are already in action, as the suicide bombers become ever younger.
An important difference between the Israeli fight against terror and America's (not mentioned in the open letter to Bush) is that the Israel has negotiable issues with the Palestinians while the US has none with Osama Bin Laden