-I'm of the mind that Israel is partly responsible for what has happened to it this week. Firstly,Israel should have never set the precedent for trading prisoners in 2004 by trading hundreds of terrorists for a single Israeli businessman, an Israeli colonel, and the remains of Israeli soldiers. That action could only have helped Hamas and Hezbollah think that kidnapping Israeli infantrymen could gain further benefits.
-Does Israel have an exit strategy? For now Israel is content to launch missiles and mortars at Hezbollah positions (whether it is hitting them is another story. Reuters is reporting that of the 204 so deaths in Lebanon about 190 of them were civilians.) Does Israel want to go so far as to invade Lebanon with tanks and infantry and then threaten the fragile democracy in Lebanon? I doubt this, because they're smart enough to know that this will pave the way for Syria to regain influence in the country. Israel has to decide if it wants to go so far as to occupy Lebanon, or just shell southern Lebanon from Israel. The latter will have no effect on stopping Hezbollah though, the stated purpose of the military operations. If Israel really wanted to stop Hezbollah, the only way it could really cripple it would be by regime change in Syria and Iran. Something Israel is not capable of doing.
Israel's only real option (that will achieve the operation's goal) will probably have to be inserting special ops, and use them to take out Hezbollah leadership and/or weaken the terrorist group. Thus allowing the Lebanese military to fight Hezbollah on more equal grounds. However, that would take real leadership from Lebanon, which seems highly unlikely given the Lebanese public's view of Hezbollah.
However, in the end, one has to wonder if the IDF has ever heard of the Iraq War before. Conventional warfare in the name of fighting Islamic extremism hasn't worked out too well there...