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The same thing was said about Area bombing during WWII. It made Germans angry at first and steeled their resolve. Then, eventually, it demoralized them. Then it made even some of the more ardent nazis realize how futile the war effort was. Then we won.

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.

You can disagree all you want, and the only people its controversial to are people who weren't in Germany. Read any memoir of the war written by a German who fought at that time and you will hear the same sentiment expressed. Both Speers and Geobells diaries admit this fact as well. It only becomes controversial when people are trying to disavow how effective it was.

As for the casualties, the British are the ones who engaged in area bombing (at night) while the Americans attemtped precision bombing (by day). The Americans suffered far higher casualties than the British. Many senior American officers considered the area bombing of civilian structures barbaric and justified their higher casualties on that basis.

Speer, who was in charge of Germany's industrial production moved most of it underground, and by late '44 Germany's industrial output actually tripled, in spite of two years of daylight bombing campaigns against military targets. What Speer could not do was protect German workers. He describes the severe effect that the loss of their homes had on his workers mentally and physically. It also demoralized the troops at the front, and great pains were taken to keep the extent of the damage at home from them.

In addition to demoralizing German workers and soldiers, bombing their homes affected the productivity of the workers themselves, depriving them of, among other things, sleep and peace of mind. That, according to Speer, did more to harm German industrial productivity than the bombing of the factories did.