There are no clear errors of fact in the writeup above. However, I feel some context is in order. There are plenty of governmental people who record their opinions, some of which are clearly blaming Israel for creating a terrorist group, but they are confusing hindsight with the knowledge available to the players at the time. The idea that Israel would deliberately arm a terrorist organization to murder it's own civilian population in order to torpedo a peace process is absurd - first of all, at the time, the PLO was not interested in any peace process, and secondly, such an attitude displays a contempt for democracies - any idiot who did such a thing in an open society such as Israel, in which freedom of speech and voting is paramount, would be permanently doomed to political exile, not running the country. Israelis are not only capable of reading the local papers but the New York Times and Le Monde as well, and probably have a clearer view of the tactical situation than most outsiders, which is how they choose their leaders. So let's look at the context of Israel's support for Hamas.
The PLO, in the late 1970's, was a Marxist organization, Atheist, or at least, Agnostic, in character, with almost all of it's support from the Soviet Bloc. During the cold war Israel and it's conflict with the Arab world was one of the arenas of conflict which made up the great chessgame of international politics. Both the US, and the Israel saw the Islamic movements as a counterweight to these Marxist organizations, mainly because they felt that both being essentially religious, monotheistic countries, they would be the natural allies of any religious group against the Soviet Union. It's easy to forget, now that the Soviets have crumbled, what a threat they were, and also easy to forget that Arafat, who has reinvented himself as a good Muslim, is a former communist trained by Moscow. The current Prime Minister of Palestine, Abu Mazen, actually has his degree in Political Science from the Patrick Lumumba University of Political and Social Sciences in Moscow where a significant amount of the PLO was trained.
Under these circumstances, it's not surprising that Israel would have formed an alliance with religious groups in the hope that they would act as a tempering force on the Muslim population - there is nothing cynical or strange about this - they simply wanted Arab allies to counter their Arab enemies.
What changed this was 1. The anti-American bias of the Islamic Revolution in Iran and 2. mistakes made by Israel in the Lebanon War. As for the first point, America didn't realize that the revolution in Iran was an anti-Western revolution, in the sense that the Shah was Western supported, and the hatred of the people was essentially a hatred of American hypocracy. For a while, it looked like the communist Tudeh party would inherit the government from the Shah and our generation may never know how instrumental the west was in bringing the Muslims to power instead of the communists. Remember, Khomeni arrived in Iran on an Air France special flight. (And at the the time the US and France were allies...) Anti-Western feeling was too strong, though, for anyone seen as a Western stooge to remain in power, and so, by a strange mix of circumstances - not by any predetermined ideological bias - the Islamic revolution became Anti-Western which was to effect Western-Muslim relations to this day.
Secondly, the Shiites in Lebanon detested the PLO, but Israel got caught up in the local conflict and decided to support the Phalangists, a Christian coalition, thereby making enemies of everyone else in Lebanon, the friend of my enemy is my enemy being a close correlate to the enemy of my enemy is my friend. It was at this point - and only at this point - that Shiite Israel relations began to sour. This was helped along by the increasingly anti-Western attitude of Iran, which was whipped up into a frenzy by American support of Saddam Hussein during the War. Israel, of course, was as much an enemy of Saddam as they were of the Islamic Republic, but since they were an American ally, they became Enemy number Two of the Iranians. (Who refer to Israel as the Little Satan, while America is the Big Satan.)
Note that that is enemy number TWO, not number ONE - Bin Laden and company, as well as the Iranians, are principally enemies of the US first and Israel second.
After the Lebanon war, Hamas' natural ally was Iran. Iran is essentially a Welfare Theocracy. The Mullah's remained in power for a long time by redistributing the land of large estate holders which is why, for instance, they had a large group of peasants to call on to beat up dissidents in Iran at any time - most of us will remember the images of countryside bumpkins with lead pipes called into to Teheran to beat the hell out of feminist demonstrators right after the revolution - they had no clue what feminism was and had probably never been to Teheran before, they were protecting the people who had given them land. Hamas took a play from the Iran play book and structured itself as a culture and charity organization IN ORDER TO HAVE A STRONGER POLITICAL BASE; they don't have a strong political base because everyone said, hey these people are real philanthropists, let's give them are vote. This makes all the difference in the world when analyzing their tactics and motives.
The fact that a former ally betrays you is seen throughout history - for some reason whenever this happens to the West, anti-Western "thinkers" think that the Western powers knew all along that they were going to be betrayed, and deliberately allowed themselves to be betrayed in order to create a war. The idea that Israel "created Hamas" to derail the peace process (right after the PLO massacre of a group of schoolchildren in the border town of Metullah), is in the same general line as the idea that America "created" Bin Laden in order to have a reason to take over the Middle East and steal it's oil. It violates the basic rule of Occam's Razor - that is, without any evidence to the contrary, pick the simplest explanation. Here, the simple explanation is really simple - both the US and Israel thought they could make friends with a certain group of Shiites, and the Shiites used them as long as they could, then sold them up the river when it was poltically expedient. Anyone who wants to push a conspiracy theory has the burden of proof on their side, not the other way around.
The most important point I want to make, and this is something nobody I know seems to realize, despite all the historical evidence to the contrary, is that there is no necessary ideological basis for the conflict between Islam and the West. If there were, Turkey could not be a Western ally, nor Indonesia, nor Malaysia, nor could Muslims live in the west in peace. Rather, the current conflict is brought about by a set of historical circumstances that did not NEED to occur the way they did - people picked their stances for tactical reasons, and this altered strategic outcomes. If you believe anything other than this, then to be consistent, you also need to believe that we are heading for a religious-secular World War III. On the other hand, if you do believe this, then there is nothing strange about Israel having Shiite allies in the past, and Shiite enemies now. Things just worked out that way.