Yes; this is why aerial bombardment is not a proper response. I welcome the ground invasion and wish the IDF success.
If "Building X" is being used to store weapons or house combat personnel, it is no longer "civilian". If an entire city has been turned into an armed enclave, from which combat operations are being routinely conducted, it is no longer "civilian".
I agree with you regarding the principle of proportionality. I believe, however, that you have forgotten to apply the principle of double effect.
If one side in a conflict deliberately chooses to place its military installations in proximity to truly civilian installations, it bears the responsibility for collateral damage resulting from attacks directed at those military installations.
If the Israelis were carpet-bombing cities, they would be guilty of a disproportionate response. In fact, they are attacking legitimate military targets which, in an act of gross negligence or deliberate malice, Hamas has sited in an otherwise civilian population. Hamas bears responsibility for any civilian casualties.
That is not double effect. Double effect is what ethically allows civilian casualties if they are not intended and a targeting system is used that best avoids them. For example, if a missile site is bombed with precision and a non-combatant is unexpectedly near it, that is a legitimate collateral casualty.
I agree that Hamas bears huge responsibility, for lobbing those crude missiles at civil targets, and for mingling combatants with the civilians, but I don't think that enables Israel to bomb apartment buildings, or even nonmilitary governement buildings. They should have gone in on the ground a week ago.
Like all murderous thugs, they tend to hide behind the civilians..