I wholeheartedly agree that Jews deserve their own state, as much as (and possibly more so) than any other group. There are already 22 Arab states and a little over 50 Muslim majority states overall, so there's certainly room for one tiny Jewish one. However, I wouldn't refer to Jews as the "chosen people" as that is merely a crude misinterpretation of religious scripture wheeled out as a slur by those who hate Jews as a means of generalizing them as all inherently supremacist.
The latter part of what you said above is just silly. The Palestinian population has flourished and increased exponentially since modern Israel was founded and even since the occupation started in 1967. Not only that, but in comparison to most of the surrounding region, Palestinians enjoy a high standard of living and are treated very well by the state of Israel, given the circumstances (i.e. being conquered). Israel acts with enormous restraint in the face of decades of terrorism, mass violence, and genocidal rhetoric from Palestinians and other Arab/Islamic tyrannies surrounding it.
If Israel's plan was to "kill everyone that got in its way" then this ongoing conflict would have been long over and for some time.