I think your hypothesis is right on. Israel tried. They gave up territory. It got them nothing. It's just to bad that the majority of the Lebanese don't support Hizzbollah are caught in the middle of the mess. Iran and Syria are the real culprits.
I think they had to show good faith to the world. Not that it was required in my estimation but the rest of the world is very anti-semitic. And you are correct about the Lebanese....I so hope things can get on track for them.
The blogs that are coming from over there are for the most part cheering the Israeli's to rid the area of Hezbollah.