I partly agree and partly disagree with seeing this as a classic Prisoner's Dilemma. In three weeks, I'll release an episode of my podcast, How My View Grew, with Einat Wilf describing how most Palestinians don't want a two-state solution and are willing to support hostilities (e.g. Hamas as leadership) until they are governing the entire land.

Your second paragraph is persuasive and incisive. One person who wrote about these different values (and there are many more) was Daniel Gordis. You summarize it really well. I wish this dynamic were more visible in the public discussion. I will mention it in future writing.