Hi SimonSays,
I am not sure if your question was for me based on what I wrote, but the concept of holy "separateness" pre-dates the Babylonian exile and the development of the Sadducees and Pharisees. It is custom-based from the norms and basic mores of ancient Mesopotaminan culture, carried over into Hebrew culture.
As to how this may have affected use of the Divine Name, philology estimates set circa 850 B.C.E. as the likely era in which redactions show textual application of this custom. It was at this point that the so-called "Elohist" additions and editorial acts of preservation offered the earliest known substitute for the Divine Name.
By the time the LXX was composed, texts of the Greek Scriptures (such as Wisdom, the Books of Maccabees, Ben Sira, etc.) used even substitutes for the word "God," often using the euphemism "heaven." This custom of viewing even the title "God" as holy and deserving of a substitute is even seen in the Gospels where some writers have Jesus announcing the "Kingdom of God" and others using "Kingdom of Heaven" in the same places.--Compare Matthew 4.17 with Mark 1.15.
As to the Jews being rejected by God, this view of the Jehovah's Witnesses originated with the Adventist movements based on an interpretation of Matthew 27.25 and John 19.15 that originated centuries earlier within the Roman Catholic Church.
After the tragedy of the Holocaust the Christian community, including Adventists took a serious step back and reviewed this theology. Realizing this interpretation actually played a part not only in the expulsion of Jews from many countries like Spain in 1492, the vicious pogroms that littered Europe, and that this interpretation was directly employed as kindle by the Third Reich in its "solution to the Jews," it was almost universally rejected.
Except for isolated groups like the JWs, this view that the Jews are rejected by God because of the rejection of the majority of Jesus as Messiah in the first century is no longer accepted as substantiated by Scripture or reason. Condemned as anti-Semitic, critical analysis now admits that texts like Acts 21.17-26 and Romans 9-11 have been widely misused and even ignored in order to substantiate a view that eventually led to the invention of genocide.
My decision to leave the Witnesses was largely based on their retention of this mistaken belief. Told by the very elder who studied with me that my people as a whole deserved to die in the Holocaust because they were "Christ killers" was impossible to reconcile with my sensibilities. So many of my direct relatives died in the Holocaust that my native language, Ladino, is now considered rare and endangered as Hitler wiped out all the Sephardic communities from the European map.
Harboring vestiges of JW theology such as this view does not immediately make a person an anti-Semite however. It takes time to understand how deeply entrenched certain doctrinal views have become set in us as we seek to renew ourselves and heal from our time in the Watchtower community. But living in an era when even the Catholic Church claims some guilt and responsibility for the crimes of the Shoah due to holding this archaic and destructive belief should give us pause if we choose to perpetuate it in ourselves and others.