First off this is not a conflict between Jew and Arab. almost half of the Jews in Israel are Arab(mizrahi). This is a conflict between religions. Secondly, no east Jerusalem is not mostly non Jewish Arabs, Israel has been building there for the last 40 years solidifying its presence there. Just look at Olmerts map to the pals. He offered them only 30% of east Jerusalem. lastly You say pals will continue to fight against the Jews because they are not equal. Well can you name one other country in the mid east where they are? Currently in Jordan where 60% of the population is Pal, the government is taking away their ID cards and the indigenous Arab population is rioting against their presence. In Lebanon they are still kept in their cages. So when are these pals going to start to rise up against their oppressors? They wont. simply because they are cool with being subjugated by other Muslims. The only reason why the Pals get so angry at Israel is because its a Jewish country.
Man shot dead in northern Israel town of Bi'ina, police say the murder was gang related (Haaretz)
from the article: Jerusalem council drops construction, apparently due to U.S. crisis