...inception, Israel has been in search of an identity for itself- some way to gather Jews together in a single place from over a hundred different countries and cultures and unify them. It's not only been a difficult task culturally but religiously. Recall that some ultra-orthodox Zionists didn't even recognize Israel, per se, pre-'67 because the Israel created by the League of Nations fell far short of the Eretz Yisrael (the biblical Israel) envisioned. With the settlements came a broader level of cooperation between the ultra-orthodox and the rest of Israel because the settlements (regardless of what the Israeli government said they were for) represented, to the ultra-orthodox Zionists, a way to colonize the remainder of Eretz Yisrael and begin to
really fulfill Torah prophesy.
Because of the settlements, rightly or wrongly, Israel is a less-splintered collection of groups than it was before them. Of course these attempts to biblically-interpret what the Israeli government defines as "buffers" from military attack is out of touch with reality. But, historically, being out of touch with reality has stopped very few inspired so inspired by their
interpretation of a religion's teachings.
So I would say, to your second question: Yes, it's a continuation, but not so much in the last 60 years as in the last 40. Meier Kahana is/was a racist but his belief in culturally-purifying Israel is a very popular bottom line. The University of Haifa does a yearly study (a poll) on extremism in Israel both among Israeli Jews and Arabs. You might want to Google that up to get a better idea of the actual numbers. They haven't released/completed the 2006 edition yet but you should be able to find the one from 2005.
To address the first part of your question, Lieberman does not represent much of a deviation from the
current mainstream Israeli politics. In fact, considering him seriously as a person worthy of a government position is just a reflection of where Isreali political thought
is currently. I wouldn't say he represents the sentiments of most Jews in Israel but his bottom line, like Kahana has a good deal of support.
America and Israel and practically everywhere else has always had extremists among their population. That, in itself means little. But when those extremists are elevated to positions of public office...then, then that's when you can start associating their ideas as a reflection of popular elements within the culture.
Allowing extremists into government positions in this case will not only hurt Palestinians and Arab Israelis but the kicker is that once they purge whomever they like from
outside their group the purges will continue within their own group. The ultra-orthodox do not consider any other branch of Judaism legitimate. The ultra-orthodox are also in control of the civil institutions in Israel: things like who can or cannot get married. Google a bit on Cohens and the restrictions placed on their ability to marry whomever they choose. What you're looking at there is a sort of "Stage 2", after some level of religious purification has occurred. Learn about the friction between Ashkenazi and Sephardim or the dark-skinned Ethopian Jews and their problems finding a place to live among their lighter-skinned brothers and sisters.
Or the genetic testing which has now become popular among certain Jewish groups to prove their "identity" which also translates into a higher level of social status and religious status, much like Cohens. I'm including a
link from Ha'Aretz (search for "The Davidians are coming") because many people would be dubious of a statement like that. There are noticable social levels associated with specific lineage. This is not recognized everywhere in Israel but with the orthodox in control of the civil system (something which should have never have happened), there's a level of enforcement available which would not normally be there.
Over the last 40 years, it's gotten pretty bad. When Labor lost in the 80's ultra-orthodox influence increased and with Lieberman it has certainly jumped forward even more.
If they don't stop the trend, they're going to wind up with a country with few or no Arabs and several different ethnic or religious classes, based on genetic heritage. It reminds me of the caste system in India and it's frightening to think of how far they're going to take it.
BTW, I am not so sure it can be stopped. The Israeli Supreme Court has been doing a decent job trying to keep things the way the founders of Israel intended but with Barak's retirement(the ex-Cheif Justice), I see very little to stop this thing from coming to really violent fruition 10 or 20 years from now.
PB