I disagree. While there may be some reason to believe that strategic bombing hurt German morale (and even that is highly controversial), its pretty clear that, had the same resources gone into tactical bombing or even artillery, the war would have ended earlier, and Allied lives would have been saved. There's an oft quoted statistic that more British airmen lost their lives dropping bombs on occupied Europe, than Germans died having bombs dropped on them by the Brits.
Likewise, regardless of whether buldozing homes steels Palestinian morale or lowers it, its clearly not the most effective use of limited Israeli resources.