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*{Then when (the son) reached (the age of) (serious) work with him, he said: "Oh my son! I see in vision that I offer thee in sacrifice: Now see what is thy view!" (The son) said: "Oh my father! Do As thou art commanded: Thou wilt find me, if Allah so wills one practicing patience and constancy!" So when they had both submitted their wills (to Allah), and he had laid him prostrate on his forehead (for sacrifice), We called out to him, "Oh Abraham! Thou hast already fulfilled the vision!" Thus indeed do We reward those who do right. For this was obviously a trial and We ransomed him with a momentous sacrifice.}* (As-Safat 37:102-107)

Thus, the offering of the sacrifice has become an annual celebration to commemorate the occasion and thank God for His favors. In this, is a clear and direct admission of the link between Islam and the Father of all prophets, Prophet Abraham.

Was it Isaac or Ishmael?

There have been two versions of which one of Abraham's sons was to have been sacrificed, Isaac or Ishmael. Some say it was Isaac, but others confirm it was Ishmael.

Muslims believe that it was Ishmael, not Isaac, who was to be sacrificed in response to God's command. There are at least twenty arguments in support of this belief.

However, none of these is meant to belittle the historical role of the descendants of Israel. In addition, none is meant to demean the light and wisdom delivered to them by Prophet Moses (peace be upon him), as the Quran points out in numerous statements.

So, the idea is much simpler than you thought. In fact, it is actually more logical and fits in with Islamic ethics, which call for social unity and spreading peace and happiness to all mankind.

My only puzzle, when I read your question, was that I asked myself: "Why didn't anyone ever regard Thanksgiving's turkey as being a turkey massacre?"

Also, you will find that the Quran makes it clear why God has prescribed the sacrifices of the pilgrimage:

*{The sacrificial camels we have made for you as among the symbols from God: in them is [much] good for you: then pronounce the name of God over them as they line up [for sacrifice]: when they are down on their sides [after slaughter], eat ye thereof, and feed such as [beg not but] live in contentment, and such as beg with due humility: thus have We made animals subject to you, that ye may be grateful. It is not their meat nor their blood, that reaches God: it is your piety that reaches Him: He has thus made them subject to you, that ye may glorify God for His Guidance to you and proclaim the good news to all who do right.}* (Al-Hajj 22:36-37)

Anyways, thanks dear friend for your question. I hope I was able to clarify the matter for you. Please keep in touch.

Salam.

Useful Links:

Understanding the Why of Hajj

What You Should Know About Hajj

Spiritual Ethics of Hajj

Once in a Lifetime 

Hajj… a Journey of Spiritual Healing

Honor the House, Kiss the Stone?

From One to Ten … All Merits!

A Stand of Forgiveness

The Black Stone… an Idol?

Takbir of Eid

Hajj 1432 (Special Page)

Az-Zabih (the Sacrifice): Was it Isma`il or Is-haq?

The Concept of Animal Sacrifice in Islam