It's complicated, the Palestinian flag isn't a terrorist symbol, the Hamas flag is. But hate crimes are based on intention and perception, so driving around a Jewish area waving it right after an attack launched from Gaza is clearly intended to cause distress. Same as sitting outside a Ukrainians house with a Russian flag at the moment.
How Britain legitimately won the land from the Ottoman Empire, handed it to the Jews and the Arabs were attacking them within hours of the nation forming?