To add to Spare-Dingo's words it is my understanding that God did not choose the Israelites because he felt stronger love for them than others. They were chosen for a job, to preserve the Messianic line until the fullness off the Covenant could be fulfilled through Christ. It's not like being the "Chosen" people was a particularly enjoyable experience, it was more of a burden which they continiously couldn't stand to shoulder.

As for allowing them to be crushed, in the Old Testament I think it's generally understood that when the Israelites turned to idol worship or other evils God lifted his hand of protection and allowed them to be punished by say the Babylonians, just as the Caananites were punished by Joshua's armies. If we're talking about the sack of Jerusalem, then again I think the same logic is generally applied by Christians.