As Apostelytizer and I have both tried to indicate, the religious aspect of the conflict between Israel and Palestine is a minority one, by far the main issue is one of security, and it always has been, as can be seen by analysing how it is the situation got to where it is today (at least, how I understand it):
After the 2nd World War the Jews in Europe felt that they simply couldn't trust the nations they were citizens of anymore. Understandable, seeing as like I said earlier Germany had been a democratic nation that had freely chosen to vote the Nazis into power, and most of the rest of the European nations had basically done nothing to help them when they were being oppressed (and on top of that Stalin was continuing to oppress the Jews in the Soviet territories).
So, they campaigned for a homeland of their own where such things could never happen again. The allied nations agreed with this idea and chose the area of Israel for the new homeland (arguably for two main reasons: it was away from Europe so it would be someone else's problem, and of course because it's the historical home of the Jewish people, which is as much a historical fact as it is a religious sentiment).
The Arabs already living there felt betrayed and outraged at the thought of having to give up their land to the Jewish settlers, especially seeing as the UK had promised them that land for their co-operation during the war.
When Israel declared its independence in 1948 the governments of the surrounding Arab nations declared war, and the following series of wars between Israel and its neighbours resulted in Israel permanently occupying certain territory, particularly in Palestine. (The UN considers this territory to be illegally occupied, hence their continued insistence that Israel withdraw from those lands).
But the Israelis, afraid that they still might be forced out of their (as they see it) one safe haven by the surrounding Arab nations, and also concerned about continued acts of violence against them in and from the occupied territories, maintain that their national security relies upon their continued occupation of those lands.
At the same time the Palestinians and the other Arab nations see the occupation as illegal and oppressive, and the Palestinian population in particular, much like their Israeli counterparts, have turned to the hard-liners, who seem to them the most able to protect them.
The religious issue certainly plays its part in all this, especially when it comes to Jerusalem, because it's the ranks of the hard-liners that contain the religious fundamentalists and conservatives on both sides. So those groups derive their power from the backing of the people who have turned to them for security, and they use that power to further their own religious agendas, which quite often tie in with the political agendas of the secular types that make up the rest of the hard-line factions.
For example, the Jewish settlers in the occupied territories tend to be religious conservatives and fundamentalists. There are a few reasons for this but two of the main ones are that: those groups are simply more driven than the moderates and liberals and so are more willing to take the risk of living on such dangerous land. And the other is that some of them believe that it's their religious duty to have as large a family as possible in order to drive out the Arabs through sheer weight of numbers, which ties in neatly with the secular hard-liners desire for the same end.
IMO if the conflict is to be resolved it will not happen by addressing the religious issues between the two nations, at least not at first. It will only happen by addressing the security issues they both have. When/if that's done the populations of those nations will almost certainly withdraw their support from the hard-liners because they will feel that they don't need them anymore, and therefore the religious hard-liners will lose their current power and influence also, which will make it far easier to then resolve any remaining religious issues.