Assurnet,
1. So how did they stay religious? BTW, prejudice against less established Jews did not start in that period and unfortunately did not end. Sepharadim in America looked down on German Jews who in turn looked down on Russian Jews. To this day Ashkenazi Chareidi institutions have a numerus clausus for Sepharadim and bnei Eidot HaMizrach.
2. Not true. The French authorities instituted a program to secularize both Moslems and Jews. Being that they also repealed the dhimmi laws they were very successful with Jews (and to this day Jews in Morocco speak French as their first language) but less so with Moslems. On the subject of Sepharadim and Eidot HaMizrach in general, the rav of Tunisia, Rav Mosh Calfon HaCohen was a staunch supporter of the Zionist movement and the aliya from there was run by Rabbi Moshe Farjoun. Rav Kapach, who was the rav of the Yemenite community in EY, was also a staunch Zionist and, in fact, learned in Rav Kook’s yeshiva.
3. Israelis are not becoming religious because of disillusionment with Zionism but because they understand that it goes together with Judaism.