Jewish-Palestinian racism, or vice-versa, is literally illogical, because today's "Palestinians" are up to 85% of Jewish origin, genetically, and even for older generations, somewhat so culturally.
There has never been a Palestinian people as part of a nation-state (Palestine was a Roman appellation designed to discourage conquered Israelites).
One State of Israel for all resident peoples makes sense ethnically, genetically, and could make sense culturally, if both sides would allow it to. For practical reasons, it makes sense to first annex Judea and Samaria.