I have always tried my best to differentiate between Jews and Israelis. It bothers me when Palestinians use these two terms interchangeably.
Every time I cross the Jordan River, I overhear people talk on their cell phones, saying how they just got into the Jewish side, left the Jewish side, or were waiting to go through the Jewish side. Such comments can be heard as people approach or leave an Israeli checkpoint or have any other dealings with Israelis.
Religious preachers use the terms interchangeably when referring to negative actions of the Israelis or the lack of trust in Jewish negotiators, etc.