I don't think that Israel really cares about creating hatred in the Palestinian population. They've already come to the conclusion that the Palestinians will hate them no matter what, so all Israel cares about is protecting themselves. Personally I think they are correct. The Palestinians care not a partner for negotiation, and they will not be in the foreseeable future. That is why the Israelis are retaliating so massively for the capturing of this soldier. They want to make Hamas understand that attacks are not going to accomplish anything but more Palestinian deaths. I think that Hamas was startled by the initial ferocity of the Israeli response, but they are prepared to escalate. Of course, if Israel chooses to bring all the force it has to bear, beginning targeted killings again, making regular incursions to attack bomb factories and other targets, etc, then I think that Hamas will be forced to back down, at least for a while. I think that Hamas wants it both ways:it wants to force the Israelis to abandon their unilateral path of wall-building, assasinations and settlement abandonment and force them to negotiate. But Hamas also wants to drive Israel back into the sea and secure the right of return for the Palestinian refuges. Israel is simply trying to continue on its unilateral path, which Israel, and I, believe is the best chance for peace.
As for the more military side of things, if I were the Palestinians, I would try to hide troops in buildings, allow Israeli troops to pass, then attack simaltaneously from the rear and the front, as well as trying to construct attacks like the urban fight scene from Saving Private Ryan, using IEDs and mines to cause chaos and casualties and then attacking from multiple directions and targeting Israeli infantry. Of course, the fact that the Israelis could simply wipe out my positions with a few blasts of cannon fire from an Apache causes soome problems, but there have got to be places in Gaza's dense enviroment where you can make an effective stand. But the main reason that this is unrealistic is that it requires effective C&C, which the Palestinians lack. Also, the Palestinians have a "martyr mentality" which also hampers them.
Utelore-I read thunder run, and you're right. But that was on a highway and then in Saddam's open palace area. The tanks had fields of fire. In a lot of areas of Gaza it would be different. But still, I think that battle/s proved that tanks can survive and are indeed very useful in an urban enviroment.