Military victory of Palestine through armed struggle is clearly a fantasy, but that is not the same thing as equating the violence on each side. The Israeli point about moral equivalence is right; it's just that their violence is what ranks lower in relative terms.
Praising armed struggle in this context is simply encouraging people to self-destruction. Doubtless they need little encouragement in any event. If the PLO made some miraculous turn to Gandhi-style CD, the IDF would start shooting them anyway. But I don't think they could get away with that indefinitely. Imagine if all the Palestinian martyrs died as innocents, or in non-violent resistance? I don't think the current state of afffairs could last, but I could be wrong. Certainly the Palestinian cause would be no worse off.
The Tony Judt piece in NYR points out that bloody armed conflict has not precluded settlement in other instances, so the use of arms by the PA et al. on this account would not preclude a settlement either, although it does not seem to increase its likelihood.
mbs