In a hilltop suburb South of Jerusalem called Efrat, Sharon Katz serves a neat plate of sliced cake inside her five-bedroom house, surrounded by pomegranate, olive and citrus trees that she planted herself. She glances out the window at the hills where, she believes, David and Abraham once walked. "We are living in the biblical heartland," she sighs.
It is a heartland the prophets would not recognize, replete as it is with pizza parlor, jazz nights at the coffee shop, grocery store and yellow electronic gate with machine-gun-wielding guards. Efrat is one of 17 settlements that make up a bloc called...