Israel allows civil unions, allows homosexuals to serve in the military without restrictions, supports Muslim private schools, pays for Islamic religious activities, and generally respects human rights. [1]
We also have our warts, like everyone country does. Israeli politicians have attempted to pass our own Protecting Children from Internet Pornographers Act. We have our equivalents of the TSA, FBI, and CIA - and for us they are an existential necessity.
Keep in mind that many - probably most - Israelis will be equally disturbed by this. Israel's Supreme Court has an excellent track record of ruling against military and government action. Their decisions are binding - there is no one above the law in Israel. Prime ministers, presidents, and intelligence organizations alike have been prosecuted.
We're also only 60 years old, and have fought 7 major wars in that time, twice in such dire situations that it was widely believed we would fight to the last dead man and lose. Compare with other countries, or just MKULTRA, before you judge us so quickly.
[1] http://en.wikipedia.org/wiki/Human_rights_in_Israel
Edit: This is almost a societal-version of the fundamental attribution error. When your country does something wrong, you blame it on the politician or individual. When you hear about the same thing happening in another country, you wonder why that country is so backwards and evil.