EL BIREH, West Bank — Dozens of Palestinian students from the youth division of Fatah, the mainstream party led by President Mahmoud Abbas, gathered here on Thursday to dedicate a public square to the memory of a woman who in 1978 helped carry out the deadliest terrorist attack in Israel’s history.

Though one senior Fatah leader and a Palestinian Authority security official joined the gathering in this town abutting Ramallah, the administrative center of the authority, the relatively low key nature of the event, timed to the 32d anniversary of the attack, was a kind of compromise. An official ceremony was put off by the Palestinian Authority as a result of Israeli protests and to avoid an unnecessary embarrassment during a visit to the region by the American vice president, Joseph R. Biden Jr., who came partly to promote new Israeli-Palestinian peace talks.

The woman being honored, Dalal Mughrabi, was the 19-year-old leader of a Palestinian squad that sailed from Lebanon and landed on a beach between Haifa and Tel Aviv. They killed an American photojournalist, hijacked a bus and commandeered another, embarking on a bloody rampage that left 38 Israeli civilians dead, 13 of them children, according to official Israeli figures. Ms. Mughrabi and several other attackers were killed.

To Israelis, hailing Ms. Mughrabi as a heroine and a martyr is an act that glorifies terrorism.

But, underscoring the chasm between Israeli and Palestinian perceptions, the Fatah representatives described Ms. Mughrabi as a courageous fighter who held a proud place in Palestinian history. Defiant, they insisted that they would not let Israel dictate the names of Palestinian streets and squares.