You're talking about "dhimmitude", yes? That is a rather patronizing philosophy - "yes, you may remain Christian/Jew, but understand that you are a second class citizen. If you are not a person of the book (Muslim/Christian/Jew), you'll be lucky if we allow you to live". Rather repugnant, don't you think?
I won't debate who invaded who first, or has justfiable grievances - it would never end.
I don't think there will ever be a genuine peace amongst all religions, until each accepts that it does not have a monopoly on the truth. There are many paths to God.