You're looking at this as an enclosed system with only Israel and Lebanon, but reality is Israel is entirely reliant on US weapons and financial aid, while Hezbollah is supported by Iran, who in turn is supported by Russia and China. The question you need to ask isn't if Israel can degrade Hezbollah or Lebanon, it's if Israel can degrade Iran more than its degrading itself, and at a larger scale can it degrade China and Russia more than its actions are degrading the United States.
This is why the war can become existential for Israel this time, in all previous conflicts United States was in a globally dominant economic, industrial and military position, and there was no Russia-China alliance on the side of their enemy with global dominance in both industry and resources. Hezbollah is an externally supplied grass root guerrilla force that can and has survived degradation, but to do so Israel is irreversibly degrading both itself and United States diplomatically, economically and militarily, all while the cost to Iran is minimal, and cost to China and Russia even less.
A United States that loses USD reserve currency, or worse gets into a war with China, is a US that will no longer be able to supply Israel with weapons, missiles, or even ammunition, and in such a situation Israel, having just burnt all their bridges for diplomacy, and having no experience surviving like Palestinians, would be destroyed
A smarter Israel would understand the global situation US is in, realize their reliance on it, and try to minimize the damage they're doing to the US for their own sake, but then they wouldn't be Israel.