About Israel's aid:
Israel agreed to phase out a large portion of it's aid. A great deal of it is styled like debt relief, and in a lot of ways, it is, since it goes to support and protect millions of exiles, as well as provide socialist programs to bedouins, and refugees of all stripe.
Another thing - 74% of the funds for military have to be spent within the United States. Israel's survival has always been very much intertwined with underground arms deals in exchange for oil, etc. and Israel continues to sell innovative war technology (including sci-fi sounding toys like heat seeking bullets that can round corners, band-aids which can act as temporary sutures, and tanks with anti-missile forcefields, all of which exist and are ready to use in battle right now). The way it is right now, when Israel sells their top of the line tank, the US State Dept. gets a say. Buffet just bought 80% of the shares in an Israeli company that provides steel work for the majority of the aviation industry, and most foriegn militaries. This site documents some other strategic benefits the US gets for it's money:
http://www.geocities.com/d_elazar/USA/IsraelAidUSA.htm
Now say the US cuts out Israel's funding. In addition to the contingency plan involving China and India, support would come from Australia, several South American countries, Turkey, and on the downlow Pakinstan, and Iran. That leaves the US picking for scraps with Russia.
On Sabra & Shatilla:
srael was a third party. If Israel has persecuted anyone, Sabra Shatilla is the worst example.
The crimes were perpetrated by Lebanese Christian militia in retaliation for the massacre of Christians in Beir Mellat in N. Lebanon, Deir Ayach in N. Lebanon, Kab Elias in the Bekka, etc. as well as the assasination of the Lebanese PM.
http://www.aceviper.net/members/cobra/intro.html
Lebanon had been cleansed of 1 million Christians. Could it be, that Israel, a country of refuseniks, and refugees sided with the Maronites for humanitarian reasons? Arabs perpretrated these crimes, and Arabs created the refugee camps of Sabra and Shatilla in the first place. Now let me ask you, why is there such a disporportionate mention of the S&S massacre compared to that of another 1982 incident, the massacre of 20,000 by Syrian president Hafez Al-Assad, in Hama? Sabra and Shatilla is the only one you can indirectly blame on a Jew, and that's the only reason you've been exposed to this story, and not stories like the massacre and destruction of the Christian village of Damour on January 9, 1976 at the hands of the Popular Liberation Front for the Liberation of Palestine. This event happened BEFORE Israel's incursion, and before the checkpoints. It's well documented.
http://www.cedarland.org/warpixs2_1.html The PLO had 18,000 militia in Lebanon plus another 6,000 mercenaries on loan from Saddam, and Qaddafhi. The accounts of the PLO in Lebanon are so gory, that even the horrors of Sabra Shatilla don't compare. Nobody cares that Muslims attacked Shatila and Burj-El 3 years later. It's just not fun unless you can blame Israel.
In addition to the Embassy murder you mentioned, there were daily shellings down into the Kibbutzes. I was visiting family at the time, and I can tell you the air raid sirens were so frequent we had to sleep inside the bomb shelters. What you're calling "attempts to solidify power" are defense measures. If Israel wanted "power" they would have taken Damascus, and Cairo when they had the chance. They attempted to stabilize Southern Lebanon, not "take it".
Finally, Jews are not collonialists in Israel, they're natives of the land.