If Israel gets all the hostages back, alive and well, it might be worth it for Israel to avoid having to level Gaza and schecht its population (no other way to do it). They can insist on a rigid ban on Palestinians entering Israel, engage in targeted killings of Palestinian leaders, and annexation of all West Bank settlements – but resign themselves to having to go back to the old system of reserves doing over a month per year, until age 55. Israel was, and probably still is, unprepared for a full scale war, which for Israel would be an “all or nothing” proposition (the “nothing” is a Judenrein Eretz Yisrael. They have assumed they would be dealing with terrorists and occasional rockets – not a full scale war on the model of World War II in which one side wins by permanently eliminating the other.
Israel also has to consider its own internal divisions, that in the United States there are strong blocks of isolationists and anti-Semites (separate blocks who hate each other), and when taken in a global context (including Eastern Europe, Iran, and East Asia) the Middle East would be single theater of world war that the “Free world” is hardly prepared for.