tbea, I have never heard of any different between Jews and Hebrews. And I am a Jew.
NiceGuyJack, there is racism in Israel, but it doesn’t have so much to do with what a person looks like as what their cultural background is. There are two major groups in Israel, the Ashkenazim (Eastern Europeans - from Russia, Poland, lots from the US and Canada, etc.) and Mizrachim (Middle Easteners - from Iran, Iraq, Yemen, Morocco, etc.). There is a deep rift between these two groups, mostly due to politics. The State of Israel was founded by well-educated Ashkenazim who were escaping anti-Semitism in Europe. After the founding of the State, in 1948, there was a sudden and huge inundation of Mizrachim, largely because their countries were now at war with Israel and they wanted nothing to do with any Jews. Anyway, these white European Jews (who were often atheists) with university degrees knew nothing of these darker-skinned Arabic-speaking people who practiced a different version of their religion. And basically, they treated them like shit. I won’t go into the crap they did, but it wasn’t good. Fast forward to today - there are now more Mizrachim in Israel than Ashkenazim, but there has never been a Mizrachi Prime Minister, and they are generally poorer and less-educated. It’s not really a good situation.
Additionally, since the fall of the Iron Curtain, thousands of Russians - most with only a vague knowledge of Judaism - have come to Israel, which was quite a shock to the country’s economy. Currently, one-sixth of the Israeli population is Soviet-born. Russian is now an important language to know, and lots of old-timers are having a hard time dealing with these changes. So the Russians have gotten a lot of crap in recent years.
The other group that has been give the short end of the stick is the Ethiopians. There are not very many of them, really, but they stand out. They were airlifted from Ethiopia in the late '80’s and early '90’s, and had the most difficulty of all in getting used to their new country. Their practice of Judaism is so different from “mainstream” that rabbis won’t even marry them without requiring them to convert first! (Except in the city of Netanya, for some reason. Lots of weddings in Netanya.) Several years ago, it was revealed that the Magen David Adom (it’s like the Red Cross) was regularly throwing away any blood donated by Ethiopians. This discovery led to riots, and many Ethiopians feel really marginalized.
These are just a few of the myriad and complicated reasons why Israel is not a homogenous society, and why it is a mistake to think that all Jews are alike in history and religious beliefs.