Nehemiah6, you are confusing Judah with Israel. The Babylonian captivity was Judah only. The nation that today calls itself Israel has no right to that name, and they should know it. The last time it was used properly was in 722 BC, before Assyria carried the 10 Northern tribes away captive. I guess they figured the name was up for grabs (Satan's idea, I'm sure). God knows where they are even if they don't know themselves. He always separates Judah from Israel in prophecy.
You are totally right about God dealing with physical Israel differently than the spiritual Israel (the Church of Christ). Do not look at Judah occupying the mid-east as Israel's return. Go back and look at all the prophecy: being sure to separate Judah from Israel.