You have probably been fed disinformation much more than being delusional, but it sounds the same ;)
> Israel is an illegal occupation started by the British in 1917.
If you don't consider the British taking the land from the Ottomans to be legal, than you will have to count turtles all the way down to Adam and Eve.
If you think the treaty made between the Arabs and Jews was illegal, than you simply don't know history.
The first land-for-peace treaty in the area gave the larger and (then) more desirable area of the TransJordan to the Arabs, and the smaller and less wanted pre-1948 area of Palestine to the Jews. It was overseen by the British, who were in control of the area, and de-facto relinquished that control by allowing the agreement.
The Jews were never happy with the agreement, but it was forced upon them by the party legally in control. The Arabs, as with every other land for peace grab, immediately forgot the "peace" part, acted as though the half given was always theirs, and proceeded to attack and kill the Jews.
(The Jews, being somewhat blind to fact, keep on falling for this trick.
It took only a few weeks from when the Israelis left Gaza till rockets were being launched from the land they vacated, Hamas was openly saying that Gaza was always theirs, and that if they would just be given half of Jerusalem there would be peace! - Lucy would be proud.)
> removing the right of return and starting an open-air prison, nothing serious!
The "open air prison" you refer to is a) not a prison at all Tens of thousands of Arabs leave the "open air prison" you have been told of for work, leisure, and college on a daily basis. b) In the densest areas, Israel has tried to build better houses, has poured funds into attempts to improve the area. Hamas will not allow it, (it is in their interest for the people to feel oppressed), and the Israeli government cannot force the rebuilding of homes as it would cause International outrage at their involvement. The funds they sent are instead given to promote terrorist activities. c) Top notch healthcare is available for all Arabs, no matter where they live d) Any Arab that wants to travel abroad is invited to at any time. What "right-of-return" did they have that was removed from them? e) For some reason, there are Arabs from all the nearby countries (Syria, Jordan, etc) trying to get into Israel, even at risk of life. Any comparative look at the treatment that they get at home shows why. If you are ever in the area and are not afraid to be open minded, check it out.
Any attempt to frame Israel as the bad guys might be politically expedient, and it may even be innocently from the garbage you have been fed, but it's factually entirely wrong.