I'm pretty sure the ugly face of Islamism(like Sayyid Qutb, an Islamist hardliner killed by Nasser, a secular nationalist despot) and the terrorism associated with it would still almost certainly appear. There are still plenty of pro Western or pro Russian despots that are secular(by Middle Eastern Standards of course) that can easily lead to them boiling in anger. The fall of the Ottoman Empire, not the creation of Israel, is the root of most of the problems. Also, I imagine this Palestine would end up like Lebanon and Jerusalem might lead to being the Beirut of TTL(very unlike OTL). Arab attitudes towards Jews probably will be mostly unchanged, but without the expulsions. Even in OTL, Daesh, believe it or not, actually said their main target was Shia Muslims, not Israel.