As we've demonstrated in Afghanistan, we have a great deal more freedom of action than do the Israelis. Failure on our part would be embarrassing, and potentially a motivation for additional attacks on us, but our country would never be in fatal danger.
I think the empty building attacks were intended as a message, the the effect that "next time we might make sure you're inside." That message has not been effective, because the PA has calculated -- correctly, so far, that Israel won't ever go so far as to kill the PA leadership. They probably also think -- again correctly so far -- that Western public opinion (which is a serious national security concern for Israel) will prevent them from escalating.
FWIW, I think that while they've been correct so far, they're probably wrong in the long term. They're still thinking in terms of Clinton and Clintonesque gestures. As a result, I think they've seriously misread George Bush, the U.S., and our willingness to prosecute the war on terrorism.
ken5050 is probably correct in his assessment of the relationship between Sharon and Bush, and also on the reasons why Israel is holding back at our request.
Maybe so, but I've got to believe that Sharon's patience is wearing thin. If it were me, I'd have started really kicking some @$$ weeks or months ago, and maybe we wouldn't be talking about innocent civilians getting killed in order to support a whim.