The USA is a bad example because it does not have a basic ethnic group. A good parallel would be: "France should not be a French state" or "Ireland should not be an Irish state" or again "Japan should not be a Japanese state."

It seems to me that Israel has two basic ethnic groups, Jewish and Palestinian. I think that many people are objecting to the perception that they are favoring one of those groups.*

I also think that many (most?) people would object to France, Ireland, or Japan favoring people who were ethnically or religiously French/Irish/Japanese.

* Edit: I think that people are also objecting to the fact that many Palestinians don't have a place where they can be prosperous and debatably had their land stolen.