1) In the early years of the state of Israel, it was actually worse for observant Jews than in other western countries. They tried to draft girls by force, they seized bodies for autopsies without permission from the family, they at first required all children to be in schools under their control. Fortunately, these three laws raised so much protest that eventually they stopped being enforced. They also kidnapped thousands of Sephardic and Yemenite children and forced them to give up their religion.

These things are, thank G-d, not happening anymore, so you are right that the Israeli government's attitude toward religion is no worse than other countries. However, it is worse in one important aspect. We believe in keeping things separate. If a Jew becomes involved in gentile culture, such as sports events or media or entertainment, it's not the best thing, but let it at least be kept separate from his Torah and religion. Let the holy things - the holy land, the holy tongue - stay holy. In the State of Israel, secular life is carried on in the context of the holy tongue and the holy land. They have taken holy vessels and used them from unholy purposes and this is a sacrilege.

You say better to be a secular Israel who at least has Jewish identity than an assimilated Jew in America who has no sense of Jewish identity. This is similar to a comment once made by Rabbi Yaakov Kamenetsky, quoted in the Artscroll biography, p. 209:

If one asks an average student, Reb Yaakov said, which is worse - for a Jewish man to marry a gentile woman or to marry a Jewish woman who does not observe the laws of family purity - he will likely respond that the latter is worse since it involves the more serious punishment of kareis. But in fact the former is a graver sin with consequences far beyond the personal tragedy of its perpetrator. The children of one who marries a gentile will not be Jewish, whereas one who marries a Jewess at least ensures that his offspring will be Jewish (see Mishneh Torah, Hilchos Issurei Biah, 12:7) Similarly, he concluded, recognition of Israel's role in preventing millions of Jews from losing any connection to the Jewish people must mitigate our kana'us, even as our love for our fellow Jews in Eretz Yisroel must "not blind us to their shortcomings."

So you and Reb Yaakov are correct, but this is all analysis of the results of the sin, not of the sin itself. The end doesn't justify the means. There is no justification to commit the sin of founding a state just because the Jews there will be better off than in other countries. Reb Yaakov himself clearly states that the creation of the State was a sin, just as not observing family purity is a sin. If there was some good result from the sin, that may be part of G-d's plan, but it doesn't change the fact that it was a sin. (Along the same lines, the Brisker Rav pointed out that according to the Rambam, Christianity and Islam were also part of Hashem's grand plan, because they brought the idea of G-d and the Torah to the ends of the earth, thus preparing the way for Moshiach. Yet that does not mean we should support the spread of those religions.

2) G-d helps everyone who succeeds in this world, even very wicked people who murder millions. He has plans and He has reasons. But His plans are none of our business - we must only do what is right according to the Torah.

Thank you for your interest.