Alright Obi, that was a very long post but I think we are actually narrowing things down to a few key critical points. I'm not going to go into Kantian philosophy or talk about morals, because none of that really applies in this situation. Neither said is majorly concerned with morals or being on the high ground, but with advancing their own side.
Your number one clear issue is with Hamas. You see no future for Hamas, no possibility for how it could change, and no future for it in Gaza-Israeli relations. Your stonewall here effectively makes anything I say mute. You ask for evidence of change and I have repeatedly offered you such evidence:
1) Curbing of rocket fire since 2008, observed and noted by Israel itself. You chalk this up to Hamas repairing its infrastructure, which is certainly is something it has to do after being bombed back to the stone age. I don't know if I would take this as "they are just preparing for another war" so much as "they are trying to restore basic services and housing so people dont die off even more" but you allow for only one possibility and it is that Hamas is only ever concerned with war on Israel. I would implore you to consider that not all of Hamas are raving, bloodthirsty demons sent to destroy the Jewish homeland. That feels like a fair thing to ask.
2) Attempts at a unity government and recognition in the UN. Here is what the President of Hamas committed to with this gesture (http://www.un.org/apps/news/story.asp?NewsID=47649#.U83e2PldV4A):
“President Abbas emphasized that these commitments include recognition of Israel, non-violence, and adherence to previous agreements. President Abbas also reiterated his continued commitment to peace negotiations and to non-violent popular protests.”
3) The attempt to establish calm and maintain ceasefires since 2008. This largely weaves with point 1), but it's important to note that the vast majority of rocket fire since then has not been from Hamas itself but splinter militant groups like the PIJ, and the vast majority of breaks in the ceasefire were perpetuated by Israel in this time (evidence: http://blog.thejerusalemfund.org/2012/12/israeli-ceasefire-violations-in-gaza.html)
Any of these things taken alone, I would agree, they do not amount to much. Taken together they are an obvious effort towards chance and potential reconciliation, or AT THE VERY LEAST, the best efforts we have seen in decades. Even admist the number of wars you have cited, these have been concrete efforts towards some kind of progress. All have been derailed or put off by Israel itself.
As for the Kill All Israelis policy of Hamas. My point of comparing this to the Samson Option from Israel was to compare extremist policies. There are many countries around the world that deal with Israel even though the Samson Option would ensure they'd come under attack or be destroyed by Israel's nuclear arsenal. No one considers this realistic and thus relations and negotiations are allowed to progress. In the world of Diplomacy (ironic considering the site we're on) this is called realpolitik. There's an understanding that some policy is intended for the local voters (using usually extremist language to get people to side with that party) and then there is what a political party actually does and negotiates behind close doors. Consider that the United States wishes to spread democracy and stands for "life, liberty, and the pursuit of happiness" yet negotiates and deals with the likes of China and various dictators around the world. As as been evidenced, Hamas has been willing to recognize and work with Israel on moving towards a two-state-solution. This is in direct conflict with their Kill All Israelis policy because it simply is not a clear-eyed, realistic policy to maintain. It is puffery, nothing more.
That said, you tend to focus on Hamas' policies while ignoring many of Israel's. Currently Israel is being run by a government that is more right-wing and more racist than the American Tea Party or the GOP. Israel has numerous policies it enforces against Palestinians and non-Jews which are racist and exclusionary at their core.
Here are a few:
http://adalah.org/eng/Israeli-Discriminatory-Law-Database
http://adalah.org/upfiles/2011/New_Discriminatory_Laws.pdf
http://adalah.org/upfiles/2011/Adalah_The_Inequality_Report_March_2011.pdf
-The Citizenship and Entry into Israel Law bars Israel's subjects from West Bank attaining citizenship, even if they have been born in Israel proper or have relatives there.
-Arab citizens of Israel are not permitted to start settlements on the West Bank or living in already existing settlements if the settlement council doesn't tolerate Arabs. Arab subjects of Israel in West Bank have no rights at all.
-The Israeli government has a long-standing policy of denying state recognition to holy places that aren't Jewish.
-The government spends far less the amount of money per every Jewish student then it does per every Arab Student. Human Rights Watch has found systematic discrimination in the number, quality and condition of the buildings, classroom sizes, provision of teaching resources and government funding.
-University courses in Israel are in Hebrew or English. Arab citizens hold fewer then 60 of Israel's 5000 university faculty positions.
Those are just a few and most inflammatory I could find and know of. These laws and policies are not based in creating a segregation between Israeli Jews and other religions (completing the idea that Israel should be a Jewish state). They are perpetuated by prejudiced and racist sentiments held by Israel's political class.
There's no bigger evidence of this than when Israel purposefully sterilized some 130,000 Ethiopians Jews (source: http://www.forbes.com/sites/eliseknutsen/2013/01/28/israel-foribly-injected-african-immigrant-women-with-birth-control/). Anti-African immigrant sentiment is riff through Israel's ruling party.
The interior minister, Eli Yishai, stated "this country belongs to us, to the white man,” and "until I can deport them I’ll lock them up to make their lives miserable.”
Moshe Feiglin, a member of Netanyahu's party, has called for Palestinians to be expelled and for Jews to populate Gaza (http://electronicintifada.net/blogs/ali-abunimah/expel-palestinians-populate-gaza-jews-says-knesset-deputy-speaker), contrary to your previous statements that no one wants such a thing.
Miri Regev, another member of the Likud party, called African-immigrants "a cancer of the body" (http://electronicintifada.net/blogs/ali-abunimah/expel-palestinians-populate-gaza-jews-says-knesset-deputy-speaker).
Netanyahu himself has overseen the construction of prison camps to hold immigrants indefinitely.
I do not believe that Israel as a whole is racist or prejudiced, just its governing body. And that governing body is the one enacting the military policies we see happening in Gaza. These African immigrants are not even shooting at Israelis. Imagine what sentiments these political members and certainly Netanyahu himselfs holds for the average Gazan, Hamas or no Hamas.
I cite all this because you speak highly of Israel's intent in its efforts against Gaza. Israel's intent, as it says, is to enact pin-point strikes against only Hamas targets. Innocent civilians inadvertently get in the way. We know and have agreed before that Israel understands the importance of good PR and you have to see that policy of intent as what it is. Good PR.
The actual policy Israel enacts in Gaza is more closer to collective punishment, and this stems from the same prejudice and racism that weaves its way through Israel's governing body. Israel wishes to break the Gazan people in hopes that they do what you yourself have wished for; a popular overthrow and rising up of a more acceptable political body. However this cannot occur, as I have stated before, as long as an exterior existential threat exists to Gazans. A battered people cannot rise up against their only lifeline, against the only people who are repairing their infrastructure and keeping the lights on.
The fact is you cannot "wipe-out" Hamas. There will always be some secondary lackey, some brainwashed youth to fill in for the latest member killed. It's funny you mentioned ISIS, because America is learning their lesson well. They are discovering they cannot bomb an extremist ideology out of existence and that the bombing only serves to fuel it:
http://rawstory.com/news/2008/Pakistan_warns_US_drone_attacks_fuel_0407.html
http://www.examiner.com/article/cia-drone-kills-40-civilians-pakistan-fuels-already-simmering-extremism
ISIS itself is the product of a weakened central Al-Qaeda. What we find again and again is that attempting to destroy these extremist ideologies only tends to produce something more extreme and more powerful in the end, like a hydra. Even if Israel could wipe out all of Hamas with this campaign, it is likely something more violent and dangerous would rise in its place, not something more to Israel's liking.
But back to the collective punishment point. We have seen this already during Operation Brother's Keeper, where IDF soldiers, alongside arresting Hamas officials who were not suspect in the disappearance of the teenagers, were sent into the West Bank to essentially raid and mess up the homes of Palestinians
http://972mag.com/beyond-mission-creep-why-operation-brothers-keeper-isnt-working/92471/
http://972mag.com/looting-by-idf-soldiers-but-on-the-spoil-laid-they-not-their-hand/66191/
The raids actually weakened the PA's legitimacy in the West Bank, as they were seen as openly cooperating with Israeli on the ruination of Palestinian homes. This could very well be the crack that leads to a more militant group rising up and taking control of the West Bank
http://972mag.com/its-time-to-imagine-a-future-without-the-palestinian-authority/92420/
And this collective punishment continues in the bombing raid on Gaza. The pinpoint strikes policy does not follow with the amount of dead Gazans that have resulted, only a fraction of which were members of Hamas or militants in any way. More Gazan children have been killed than any Israel civilian and soldier in the past few years. The high number of deaths, along with the indiscriminate bombing and use of high payload ordnance in high density areas:
http://i.imgur.com/CNeT2N4.png
https://7e8c.https.cdn.softlayer.net/807E8C/origin.theweek.com/img/dir_0122/61117_article_full/an-israeli-air-strikenbspon-gaza-on-july-8.jpg?206
http://d2yhexj5rb8c94.cloudfront.net/sites/default/files/styles/article_node_view/public/Israel%20Airstrikes%20on%20Gaza%20_AP%20Photo_0_0.jpg
http://static1.businessinsider.com/image/53c73d4becad04cd16f996b6-480/gaza-strip-israeli-air-strike.jpg
points to a policy which is attempting to frighten and harm all Gazans and not just Hamas itself. There is no justification for this kind of bombing, particularly with the varied and highly technological nature of the arsenal available to Israel.
Your analogy about the shooters and hostages in the store is an apt one, but you underplay the situation. It's more like the police have the store surrounded and are not doing anything, just milling about and waiting, talking among themselves. When a shot comes at them from inside the store, they all open fire, riddling the store with bullets, throwing grenades through the windows, hitting anything and everything they can. When the situation is done both the shooters and the hostages are dead and they walk away from the situation feeling they have done their job correctly. No people or police force in the world would consider that a good job, or a proportionate response to the threat they were under.
So, what do I think can be done? I think if Israel was true to their stated intent, that they did not want to harm Gazans and only Hamas, then they would allow for a place for refugees to flee. If Gaza is a war zone then they must allow innocent civilians to get out. Establish a highly restricted and monitored refugee camp outside of Gaza, controlled by the IDF, where women and children and certainly some men could stay and be provided with food, water, and shelter outside the control of Hamas. This would drain the legitimacy of Hamas' aggression and provide safety to the Gazan people. Israel would then be free to pursue a more open and aggressive campaign against Hamas. When the Gazan people do not have to worry about being bombed, they would be able to collectively decide a better way to govern themselves, without fear of reprisal from Hamas. I think this is the best situation outside of any Israel - Hamas negotiations, but it is likely not to happen (and you admit so yourself) because "Israel does not want to". I would chalk that up to Israel's prejudice and racism against Palestinians, but you can make of it what you will.
Now Obi, we've gone back and forth a lot, and as you've said I've provided a lot of evidence to back up my points. Your posts however are free of anything like that and are filled with conjecture and anecdotal points. Your posts are largely how you feel, not the reality on the ground. I would pose a challenge to you in any reply you make:
1) Provide sourced evidence for even some of your claims
2) Search and find for any concession that Israel has made to the Palestinians, Gaza or West Bank, since 2009. Negotiations are not a one way street and for any sort of truce to be successful Israel have to give as well as take. What has Israel done to advance negotiations and the peace process that hasn't been strictly on their terms? What have they offered to give , other than a momentary lapse in bombing, that has been rejected?