> So what would you do if you're Israel? Suck it up? Leave the hostages to rot in Gaza?
What they're doing doesn't seem to be working, so maybe something else.
This is just armchair military philosophizing, but after the October attack, go ahead and do some big disproportionate response stuff for 30-90 days, then a ceasefire and prisoner exchange (this happened). But if the ceasefire doesn't work out, you can't go back to disproportionate response on the October attack; that doesn't look reasonable. Cat and mouse strikes on leadership until the hostages are released (edit: but not while leaders are gathered for peace negotiations!). You can still do proportionate response for any tit-for-tat kind of attacks in the occupied zone.
A war of occupation is a PR thing. You need to convince outside observers you're occupation is reasonable --- two years of disproportionate response doesn't do that. You also want to convince the occupied people not to support armed resistance; disproportionate response can work for that, but IMHO not over a long period of time; in the short term, it can get people to demand a stop to fighting, but after two years, again IMHO it just breeds more desire to fight.
You also need some sort of plan for after the hostilities end. How do you set the conditions so this is less likely to happen in the future. Really, the best way to have peaceful coexistence between Israel and Palestine as two states is for Israel and Palestine to both be prosperous; Israel needs to help make that happen, because it's in Israel's interests --- even if maybe it doesn't feel like it; a prosperous Palestine will be incentivized to be peaceful because prosperity is tenuous; a destitute Palestine has no need to be peaceful, because it has nothing to lose.
There's a lot of talk about ending Hamas; maybe that would do it, but if Hamas disbands today, you need something to replace the government services they provide. What's the plan for that? What would the interim system look like between now and that; can you enforce the interim system now as a way to push Hamas out?
Alternately, big problems require big solutions. Forcibly return Gaza to Egyptian control, as it was before the Six Day War, and encourage Egypt to deal with Hamas through diplomacy and response to future attacks from within Gaza as if they were from Egypt.
Perhaps return the West Bank to Jordan ... maybe do the return of the West Bank first as a show of 'if y'all give us the hostages, we'll end the occupation' Returning the West Bank is hard, because you've got to figure out what to do with the settlers, which is probably a lot of tricky negotiations over which settlements can be kept with a land swap and which have to be abandoned, so it probably can't be done super fast.