Did the Zionists reject the Peel Commission ?

Yes.
The 20th Zionist Congress, which convened in Zurich in August 1937, almost UNANIMOUSLY REJECTED the British proposed partition plan of Palestine (which became known as the Peel Commission Partition plan) (Israel: A History, p. 88, and One Palestine Complete, p. 414).
Although the proposed Peel Commission's partition plan was rejected because the areas allocated to the "Jewish state" was "too small," the concept of partitioning the country was adopted by the 20th Zionist Congress. Check both maps below : the Peel Commission which was rejected by the 20th Zionist Congress, and the map proposed by the U.N. GA in 1947 for the partition of Palestine.While inspecting both maps, note the following:
1) The Jewish population in Palestine as of 1937 was under 27% of the total population.
2) The Jewish population in Palestine as of 1947 was under 33% of the total population.
3) The Negev Desert was populated with Zionist Jews only in few isolated colonies.
4) The Peel Commission allocated the most fertile regions of Palestine to the "Jewish state," which included all of Galilee and a much wider area in the coastal region compared to the areas proposed by the UN GA in 1947.
Think about the following questions:
  1. If the Peel Commission plan had been accepted by the Zionists in 1937, how many Jews might have been saved from the Nazi holocaust? In that respect, it's worth quoting Ben-Gurion, who wrote twenty years later: "Had partition [referring to the Peel Commission partition plan] been carried out, the history of our people would have been different and six million Jews in Europe would not have been killed---most of them would be in Israel"(One Palestine Complete, p. 414).
  2. Why is the rejection of the 1937 Peel Partition plan justifiable according to many Zionists, but the Arabs' rejection of the 1947 UN GA Partition plan is not?
  3. To give a different perspective on the issue, it's worth contemplating what Moshe Sharett, the 1st Israeli Foreign Minister, said in justification of why the Palestinian people would reject any Partition to their country. Sharett stated behind closed doors to the Zionist Actions Committee , the supreme policy making body between the Zionists congresses of the World Zionist Organization on April 22nd, 1937:

"The proposed Jewish state [referring to the proposed 1937 Peel Commission partition plan] territory would not be continuous; its borders would be twisted and broken; the question of defending the frontier line would pose enormous difficulties .... the frontier line would separate villages from their fields .... Moreover the [Palestinian] Arab reaction would be negative because they would lose everything and gain almost nothing ..... in contrast to us they would lose totally that part of Palestine which they consider to be an Arab country and are fighting to keep it such ... They would lose the richest part of Palestine; they would lose major Arab assets, the orange plantations, the commercial and industrial centers and the most important sources of revenue for their government which would become impoverished; they would lose most of the coastal area, which would also be loss to the hinterland Arab states..... It would mean that they would be driven back to the desert ('Zorkim Otam') .... A Jewish territory [state] with fewer Arab subjects would make it easy for us but it would also mean procrustean bed for us while a plan based on expansion into larger territory would mean more [Palestinian] Arab subjects in the Jewish territory. For the next 10 years the possibility of transferring the Arab population would not be 'practical'. As for the long-term future: I am prepared to see in this a vision, not a mystical way but in a realistic way, of a population exchange on a much more important scale and including larger territories. As for now, we must not forget who would have to exchange the land? those villages which live more than others on irrigation, on orange and fruit plantations, in houses built near water wells and pumping stations, on livestock and property and easy access to markets. Where would they go? What would they receive in return? ... This would be such an uprooting, such a shock, the likes of which had never occurred and could drown the whole thing in rivers of blood. At this stage let us not entertain ourselves with the analogy of population transfer between Turkey and Greece; there were different conditions there. Those Arabs who would remain would revolt; would the Jewish state be able to suppress the revolt without assistance from the British Army?"(Expulsion Of The Palestinians, p. 59-60)

Moreover, Zionists sometimes tend to forget that many Zionists also objected to the partition plan (the Revisionists, for example), or viewed it only as an interim solution (MAPAI), and that during the 1948 war the Zionist forces ignored the partition plan, attacking and capturing territory beyond its boundaries.
Early Revisionist Zionist groups such as Betar and Irgun Zvai-Leumi regarded Greater Israel as the territory of the Mandate of Palestine including Transjordan. Yitzhak Shamir was a dedicated proponent of Greater Israel and as Israeli Prime Minister gave the settler movement funding and Israeli governmental legitimisation.
One day after the 1947 U.N. vote to partition Palestine, Menachem Begin, the commander of the terrorist Jewish organization , Irgun and Israel's future Prime Minster proclaimed:

"The Partition of Palestine is illegal. It will never be recognized .... Jerusalem was and will for ever be our capital. Eretz Israel will be restored to the people of Israel. All of it. And for Ever." (Avi Shlaim, Iron Wall, p. 25).