The other book I was thinking of may have been
The Boy From Over There by Tamar Bergman. In any case, that one deals with the same time period.
I think this, and the Carol Matas books (
After The War and
The Garden) will help get across the Jewish/Israeli viewpoint - they're a group that's suffered a huge collective trauma, still being persecuted in parts of Europe, so they go somewhere they feel they'll be comparatively safe and fight to survive. This, of course, happens to be less than ideal for the people already living there. And now, they've been living there for 2-3 generations, and no more want to pick up and leave than people in the US want to go give the land back to the Native Americans.
Habibi by Naomi Shihab Nye is one I ran across from a Palestinian point of view (since I feel my recommendations have been slanted towards the Israeli side

). Heard of it before, but haven't read it.
And thank you! In trying to track this one down, I stumbled across the title of another book that I've been trying to remember for years! I'm totally thrilled!