I appreciate your spirit, but something is holding Israel back. You say they are doing it right, but then why are we hearing about new kidnappings? The Palis don't think Israel can attack. Also they would never expel Palis or retake parts of Gaza (they should, but it would take a Netanyahu).
No, I say they are doing it WRONG. They are doing very little in the way of action, and very much in the way of bombastic threatening - the exact opposite of what they should be doing. I agree that something is holding Israel back...probably the State Dept.'s advice to Bush.
I very much think that they should show some intestinal fortitude and do something similar to what I stated above - even if it means that Condi and the President aren't too happy. What are they going to do, cut off aid to Israel because Israel does what we ourselves would do?
As to expulsions and taking back territory - Israel gave the territory to the Arabs unilaterally, and it can take it back the same way. By Bush's own words of the past several years, the Pallies cannot be parties to a negotiation if they don't stop the terrorism. Done publicly, relying on world (which is to say, US public) opinion to sway policymakers in DC, this will accomplish Israel's goals.