There is an excellent article on why Diaspora Jews feel embarrassed (wrongly) by Israel here
http://anothermudpit.blogspot.com/

This is how it closes:

Examining Israeli actions, without context as to why they take them, and without any relation to the way other nations react under similar circumstances, or without relation to the status of other societies in the world, only has the effect of portraying Israel as an evil country, and deligitimizing its existence. Without any accurate relation as to the actual situation of Israeli society. It breeds hatred of Israelis, and results in shaming Jews around the world to the point that they no longer are willing to voice any support what-so-ever, even themselves becoming convinced by the one sided picture being drawn in the media, on the internet, and by the leaders of the world.[How true as this website proves]

But the bottom line is, no matter what efforts are made, Israel will always be portrayed in the mass media based on the parameters discussed above, disconnected from the world, only focusing on its perceived imperfections, and repeatedly vilified by a huge number of people in the cyber world. It's upsetting, it's disturbing, and try as we might, there's not much to change it.

As long as American [and British] Jews stand in the sidelines, [cheering on the demonizers and delegitimizers] and are more worried about how Israel is making Jews look, than about the honest portrayal of Israel and its right to defend its citizens and demand fair and equal treatment, it seems, that Israel will continue to make Jews look bad.

Sadly how true.