Are the Israelis and the Muslims at war?
No. Neither of them are fighting "the Muslims" as a group. Most Palestinians are Muslims anyway. The Israeli-Palestinian Conflict is between two national groups: Israelis who are primarily Jewish against Palestinians who are primarily Muslim. However, neither Israeli nor Palestinian forces have declared that they are fighting Islam. There are numerous mosques in both countries where Muslim worshipers freely pray to God.
No. Religion is a very small part of the war and is often used (incorrectly) to label Israelis and Arabs since most Israelis are Jewish and most Arabs are Muslim. However, there are many Muslim Israelis and Christian Arabs and Christian Israelis. For a discussion of the other numerous causes of the Arab-Israeli Conflict, see the Related Question.
Yes. Numerous Muslims serve in the Israeli Defense Forces. The majority come from Bedouin families as opposed to the Palestinian Israelis, but there are some Palestinian Muslim Israelis who serve proudly in the IDF. Most Bedouins when asked about whether there is a Muslim injunction on fighting other Muslims, they respond by asking: And what about all of the wars between Muslim States? Circassians are another Muslim minority in Israel who serve in the army…