Is there something idealistic and even holy in loving the Jewish people? Or is this just another form of nationalism, a feeling far less noble than the universal love for all peoples?
Chanukah Lights
The minimal obligation during Chanukah is to light one candle each night of the holiday. 
What is the connection between Chanukah and the Succoth offerings?
There is, however, a well-known disagreement about what is the optimal way to light: "For those who are the most punctilious (mehadrin min hamehadrin): Beit Shamai ruled that they light eight lights on the first day, and the number of lights decreases each day. But Beit Hillel ruled they light one light on the first day, and the number of lights increases each day." (Shabbat 21b)

What is the connection between Chanukah and the Succoth offerings?
There is, however, a well-known disagreement about what is the optimal way to light: "For those who are the most punctilious (mehadrin min hamehadrin): Beit Shamai ruled that they light eight lights on the first day, and the number of lights decreases each day. But Beit Hillel ruled they light one light on the first day, and the number of lights increases each day." (Shabbat 21b) What is the reasoning behind each position? The Talmud explains that Beit Shamai compared the Chanukah lights to the number of bull offerings on Succoth, which decrease each successive day of the holiday. Beit Hillel, on the other hand, followed the dictum that "in holy matters, one should add and not detract."
Does this discussion encompass an underlying philosophic disagreement? What is the connection between Chanukah and the Succoth offerings?
The Jewish Home
The conflict between the Hellenists and the Hasmoneans was not just an armed struggle for political independence. The essence of the conflict was ideological, a clash of widely divergent cultures. Greek culture stressed the joys of life, physical pleasures, and the full expression of human imagination in art and literature. As a result, the Hellenists fiercely opposed the Torah of Israel, with its focus on purity and sanctity.
One aspect of the mitzvah of lighting Chanukah lights is unusual. Unlike most mitzvot, the basic obligation is not on the individual but the home - "ish uveito." Only if one wishes to fulfill the mitzvah more fully, like the mehadrin (the diligent), does every member of the household light. Why is this?
The average Jew may not accurately exemplify in his everyday life the ideal behavior and beliefs of the Torah. Nonetheless, one may recognize the special light of the Jewish people in his family life. Purity, modesty and other holy traits are clearly personified in every Jewish home that follows the ways of the Torah. Therefore, the fundamental obligation of the Chanukah lights - representing the Torah's victory over the corrupting influences of Greek culture - is not for the individual, but for the home, "ish uveito."
Mehadrin
There are, however, righteous people whose personal life does in fact exemplify the Divine sanctity of Torah. Such individuals are suitable to be mehadrin. Each one lights a Chanukah light, since the beauty and light of Torah accompanies them in all their ways. Regarding the spiritual light projected by such holy individuals, the Torah writes: "And all the peoples of the earth will see that the name of God is called upon you, and they will be in awe of you." (Deuteronomy 28:10)
And there is a third level, even higher - the mehadrin min hamehadrin. These are selfless individuals whose goals are so lofty that their efforts are not for their own personal welfare, not even their own spiritual benefit. Rather, they strive to promote God's will in the world. The miracle of Chanukah awakens the hearts of these holy individuals to pursue their lofty goal, and they light accordingly.
The Universalistic Approach
The question is: What is God's will? What is the ultimate goal of creation?
There are two paths that these holy individuals may follow. The first path is to meditate on 
The miracle of Chanukah awakens the hearts of these holy individuals to pursue their lofty goal.
God's will in the world by considering the many peoples that God created. For what purpose did God create all of these souls in His Divine image? Surely God intended that they will ultimately attain good, that they will be raised from the depths of evil and ignorance, until they merit the level of the righteous who delight in God and His goodness.

The miracle of Chanukah awakens the hearts of these holy individuals to pursue their lofty goal.
God's will in the world by considering the many peoples that God created. For what purpose did God create all of these souls in His Divine image? Surely God intended that they will ultimately attain good, that they will be raised from the depths of evil and ignorance, until they merit the level of the righteous who delight in God and His goodness. According to this universal outlook, the purpose of the Jewish people is to inspire all the nations to strive for Divine enlightenment and holy life. One is naturally drawn to follow the Torah not because it benefits the Jewish people, but for the more enlightened reasoning that whatever benefits Israel now, will benefit all of humanity in the future. For such a person, the focus of his life is not love of his people, but rather love of God and His Torah. For the Torah encompasses the ultimate goal of elevating all of humanity, while love of Israel is merely a means to this end.
Love for the Nation
The second path of the lofty righteous concurs that self-love is not suitable to be the highest goal, even if it is love of one's own people. Rather, we should love that which is good for its own sake. Our overall goal should be that content that is the highest and loftiest. Since a special segulah (Divine quality) is secreted in the Jewish people, they clearly have the potential to attain the highest state, the focus of all spiritual life. This deserves to be the goal of the entire Torah.
Love of Israel is thus a true value of the Torah, since even according to the highest level of Divine justice, the final goal will remain the elevation of Israel. For the ultimate goal is not measured in quantity, but in quality; and the unrivaled quality will always remain the heritage of Israel, due to their Divine bechirah and unique segulah quality.
Beit Shamai
What do these two approaches have to do with the disagreement between Beit Hillel and Beit Shamai?
The universalist view sees the purpose of Israel as leading all peoples to become one agudah, a unified society living a life of holiness and righteousness. Over time, the plurality of diverse national characteristics will progressively diminish as they absorb the ever brighter light of truth. As the nations are drawn to the sanctity of Torah life, their distinctive national traits will lessen. This is the approach of Beit Shamai, who taught to progressively reduce the Chanukah lights until there remains but one single light.
Both the historic confrontation with Greek culture, and the subsequent victory of Israel, led to an increased interaction and influence of Israel upon the nations. The conflict with Hellenism brought about a quantum leap in the world's familiarity with the Torah's teachings. Thus, it is fitting to connect the world's ultimate elevation with the lights of Chanukah.
The Opinion of Beit Hillel
Beit Hillel certainly concurred with this universal mission of the Jewish people. But is Israel just a tool to elevate the rest of the world? The true goal of the Torah is to establish the highest and loftiest level of life, and that will only be attained through the intrinsic segulah quality of Israel.
Spiritually, the generations appear to be increasingly impoverished. As the sages remarked, "The curse of each day is greater than the one before." (Sotah 49a) However, the inner segulah of Israel can only be properly measured if we take into consideration all the generations of Israel over the ages. Every generation that maintains Israel's special covenant with God, despite the pressures of persecution and exile, contributes to the overall segulah of this amazing, unique people.
The many nations of the world are certainly superior numerically. However, their elevation is, in fact, a means to allow the revelation of a loftier sanctity. They will enable the unique 
The universalist view sees the purpose of Israel as leading all peoples to become one agudah.
segulah that will crown the world in the end of days - an entire people ready for a Divine life on the highest level of holiness. This is the ultimate goal of creation, as the sages taught, "The thought of Israel preceded all." (Breishit Rabbah 1:4)

The universalist view sees the purpose of Israel as leading all peoples to become one agudah.
segulah that will crown the world in the end of days - an entire people ready for a Divine life on the highest level of holiness. This is the ultimate goal of creation, as the sages taught, "The thought of Israel preceded all." (Breishit Rabbah 1:4) How does this viewpoint look at the lights of Chanukah? Despite the historic importance of the Hasmonean victory and the resulting increase in Israel's influence on the world, the quantitative advance is still secondary to the qualitative goal. Therefore, on each night we add an additional light, symbolizing the increased light and influence of Israel. The focus is not on the gradual unification and elevation of the nations of the world. Rather, the Chanukah lights represent the increasing light emanating from Israel, as it grows in stature and diversity, reaching out to each nation according to its special characteristics and needs.
Now the explanation given for the opinions of Beit Shamai and Beit Hillel becomes clearer. Beit Shamai, who stressed the universal influence of Israel, compared the Chanukah lights to the bull offerings of Succoth. What is special about these offerings? The sages (Sukkah 55b) noted that the total number of bull offerings was seventy. These offerings were brought for the spiritual benefit of the seventy nations of the world.
Beit Hillel, on the other hand, taught that "in holy matters, one should add and not detract." The real reason why love for the Jewish people is a proper goal of the Torah is due to the special segulah of Israel. Its existence is a goal even higher than the elevation of all of humanity. Love of Israel is rightfully considered a holy matter, as it guards the unique role and mission of Israel.
Jewish Nationalism
To question whether Jewish nationalism is a true value of the Torah stems from a superficial understanding. The real question is whether the ultimate Divine goal is quantitative in nature - the elevation of all of humanity through Israel and its Torah - or qualitative - the incomparable segulah quality of Israel. If we utilize Rabbi Yehudah HaLevi's metaphor of Israel as the "heart among the nations," then the argument between Beit Hillel and Beit Shamai may be restated as follows: Is the heart subservient to the other organs of the body, as it provides them with life-giving blood? Or is the heart the central organ, protected and sustained by the rest of the body? Both of these positions are legitimate; as the sages remarked, "Both are the words of the Living God." (Eiruvin 13b)
This is the basis for a true understanding of nationalism in Israel. It is elevated far above the common form of nationalism as it is expressed in other nations. This unique national love is based on the ultimate goal that can only be fulfilled through the Jewish people. The nationalism of Israel contains elements common to the regular concept of nationalism, but it is of a totally different order. To compare them is similar to the midrashic statement about the Temple: the physical Mikdash below directly corresponds to the heavenly one above (TanhumaVaYakhel 7).
[Adapted from Ein Ayah vol. III pp. 61-63]