Occasional suicide bombers don't come close to representing an existential threat. Casualties even in the hundreds do not represent a significant percentage of the population, Israel will not disappear because people are afraid/unable to move freely. In dry statistical terms, these are merely quality of life issues. And before you even start: I think the bombings are horrible atrocities -- I just don't think they're existential threats.
An existential threat is one that can literally wipe Israel off the map -- something that perhaps we Americans cannot fully grasp. All-out wars represent such a threat, because to Israel, losing means losing everything.
And a decision to start an all-out war means that Israel has decided to risk it all. The threshold for such an decision has to be very high.
As an example, think of home and family. There is a point at which we would choose to do something, even if our failure meant the literal destruction of wife, kids, house, and ourselves. Unless we're nuts, we wouldn't take such risks over every little thing, or even every large thing. Probably, we'd only do it in a life-or-death situation.
That's the kind of choice Sharon and pals are faced with. I'd hate to be them.