Israel tried to bribe Hamas into not attacking them, yes. Was that a bad plan? Should they not have tried to make life good enough for Gazans to not resort to terrorism?
A literal reading is that sowing division among Hamas and the Palestinian Authority would prevent a unified effort for Palestinian statehood. A more cynical reading would be to prop up the crazies to point at them and say, "look at what they're doing, they shouldn't be allowed to self-govern."
The heritage of both the Israeli people and the Palestinian people is steeped in literally thousands of years of history in that land. While one group, the Jews, were often displaced from it, it does not diminish the ties the Palestinian people have to that land. A land they cultivated and farmed for, again, thousands of years. Well before formal borders of any nation today were recognized.
We can nitpick on specific words and phrases, but the broader point still stands. These are human beings who are used for political aims, whose suffering is a means to an end, and it's all happening at the hands of people who do not respect human life. Whether you want to play partisan and choose the label of "Hamas" or "Israel" is up to you, but both are guilty nonetheless. It just so happens that one of those two parties has more resources at their disposal than the other to inflict profound misery and annihilation.
The PA, to this day, pays the families of terrorists who kill Israelis. They're not the good guy. Yes, Israel decided back then that Hamas can't possibly be worse so they gave them a chance. Keep in mind at that point in history, the PA had done far more harm to Israel than Hamas.
Since we're cherry-picking, let me continue the sequence for you...
...propped up by Israel to be elected by the people of Gaza. [0]
[0] https://www.timesofisrael.com/for-years-netanyahu-propped-up...