Am i right about the muslim holy sites and their significance?

Yep. From the dome of the Rock, Muhammad supposedly flew to Heaven.(He came back.)

...He was riding a donkey. No, that is not a joke.

http://en.wikipedia.org/wiki/Buraq

The Dome of the Rock is supposedly centered the place Muhammad rose as much as heaven on his night time ride from Mecca to Jerusalem. This makes the Jerusalem the third most holy city in Islam after Mecca and Medina. The true query is why do two religions which each keep idolatry as incorrect worry about claiming holy cities.

Mecca is not significant because Muhammad was born there. Mecca is significant because God decreed that place as sacred and Adam created the first house of worship there, the Kaaba. During Noah's flood the Kaaba was damaged so Abraham and Ishmael renovated the Kaaba. Madina is sacred because the people of Madina gave muslims asylum when people of Mecca were committing atrocities on them. Jerusalem is holy because Abraham and his progeny were from there including Isaac, Moses, Jesus, Soloman, etc.

You can see on the answers that there is a lot of hogwash. The places visited by the false prophet were settled for many centuries before.