This verse refers to Joshua's conquest of the Land of Israel, and was a specific injunction for a specific time. You can find more verses like that, such as the obligation to kill a people called "Amalek" (which the Talmud says no longer exists because that nation is mixed with others). Neither of these things are applicable in today's Judaism. If you really want to know the facts, you can get a translation of Maimonides "Mishneh Torah" - in fact, the settlers are based on a minority opinion held by Rabbi Shach, and that is why out of a few million devoutly religious Jews in Israel, a very small percentage are "settlers". Don't take my word for it.
Police disperse hundreds in brawl in Kafr Manda, northern Israel (Haaretz)
from the article: Time to attack
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