Im just confused as to why R Yehuda would reject what we consider to be a major component of our religious belief (Yishuv Haaretz) at all. I understand that the majority of opinions dont hold like him, but why is there even one opinion that does?? Can we call it "wrong"?

R. Moshe Feinstein, in his introduction to his classic responsa Igrot Moshe says that yes, often in a difference of opinion among rabbis, one of the opinions is wrong, especially if it contradicts the mainstream and accepted halacha (the Shulchan Aruch). When R. Hillel (an amora, not the famous tanna Hillel) denies there is a mashiach (Sanhedrin 99a), which is even one of the 13 Principles of Faith of the Rambam, yes, he is wrong. That is precisely the job of the poskim, to decide the halacha between the different opinions, even on very basic issues. Especially on this topic, the Vilna Gaon already wrote 200 years ago, that the opinion that there's no mitzva to live in Eretz Yisrael, has already been rejected by all (!) of the rishonim and achronim, and that those who try and revive Rav Yehuda's rejected opinion, are just searching for an excuse not to make aliya (he obviously understands that Rambam differently than you do, as do many commentaries). He even adds that they are still caught up in the sin of the spies (cheit hameraglim), who spoke against making aliya to Israel. In short, it's not worth your time to pursue such a clear, black and white opinion, unless it's in the framework of last week's parshat Shlach! On every issue it's legitimate to ask, but these "way-out" opinions apparently are throwing you off track, at this stage in your learning. You can't build an ideology just based on the question, "what, the other side may be wrong?!"