Why the Palestinians Won't Accept Israel as a Jewish State

Ever wonder why the Palestinians have refused to recognize Israel as a Jewish State? I have. I wonder what's the big deal in recognizing the reality, even if you wish it were not true. Why let everything fall over what should really be such a minor point - negotiations wont get them, ever, pre-67 Israel, so, assuming peace with Israel is the real goal (which might not be true), they must be resigned, somewhat, to living alongside Israel. So why not just recognize Israel as the Jewish State it is?

Asharq Al-Awsat now provides the answer to the question.. (Asharq Al-Awsat is a pan-Arab daily newspaper). In this interview with "Palestinian Foreign Minister" Riyad Al-Maliki he reveals what the problem is.
From the interview:

Q: You said that there are a number of contentious issues. Which is the most intractable?This is the issue of recognizing the Jewish nature of the Israeli state. This is a sharply contentious issue. It would be dangerous to recognize this because this would mean our acceptance of the dissolution of our own history and ties and our historic right to Palestine. This is something that we will never accept under any circumstances. Acceptance of this would also raise fears about the fate of the 1.8 million Palestinians living in Israel. They are already second-class citizens, so how will they be affected by the Judaization of the state? This also raises questions about the [Palestinian] refugees and the right of return. So this is something that we absolutely cannot accept

If they would recognize Israel it would mean admitting that their own history is contrived and fake. The two cannot really live together - not in a physical sense of two states side by side, but the two peoples historical claims are so in opposition to each other that one or the other is an obvious lie when placed next to the other.
Two states living peacefully side by side might be possible in a physical sense, but not in a historical sense.