I agree Israel thinks it is doing what is required. In the process, they are making more enemies (i.e. motivated enemies that take action, not just enemies that mutter under their breath and go about their day). And, as I said, Hamas isn't giving them a lot of options.

Politically, I don't know if there is an answer short of genocide. One side will probably have to wipe out the other. But the average citizen on both sides likely just wants to open their shop, or till their little plot of land, in peace. Basically, they want to be left alone. But some subset of each population wants the other population expunged, and they're active enough that they seem to control the actual politics of their respective sides.

At this point in time, no one in the region can stand up to Israel. So either Hamas is stupid (unlikely), or they're gambling on Israel to blunder into a bad situation (like we did in Iraq), and either waste vast sums of money, or become a pariah that nations would hesitate to support.