Open dialogue is quite clearly the most fruitful approach. Obviously, an idea is not a solution if it doesn't work, and pragmatism must reign. I feel somewhat presumptuous offering solutions since I am not an expert on this topic, but rather a long time, devoted amateur. What I am proposing is that people reconsider the facts.
Hezbollah is a frightening force, no rational person would argue that Israel should not have responded to Hezbollah's attacks. The question I propose is: what Israeli response would have most benefitted Israelis? Hezbollah attacked and kidnapped Israeli soldiers and launched and handful of rockets at Israel. Most of the world condemned this action, including Saudi Arabia. When Israel started attacking, most of the Arab world held back their usual criticism for a bit. Here was great opportunity to try something different.
Since the beginnings of Israel's offensive, almost 2000 rockets have hit Israel, and 52 Israelis (33 soldiers and 19 civilians) have been killed. Does anyone actually think that there would have been more deaths and more rockets if Israel had not attacked? It looks quite clear that this attack against Lebanon has actually contributed towards increasing Israeli deaths and increasing the damage inflicted on Israel.
"Forty-five Israelis were killed in Palestinian militant attacks in 2005, the Israeli internal security agency Shin Bet has reported..." "377 Qassam rockets" were launched towards Israel. "The main reason for the decline, Shin Bet said, was the informal truce observed by some Palestinian groups."
http://news.bbc.co.uk/2/hi/middle_east/4574720.stm To put this into perspective, Israel as a nation without the occupied territories has a population of about 6.2 million. Just over 500 Israelis (civilians and soldiers) have died from the current intifada, 2000-2005, in Israel, so about 85 people per year. So that's a murder rate of about 1.4 per 100,000 residents for Israel. There are roughly 400,000 Israelis in the occupied territories, and if you add in the Israeli deaths from the occupied territories, you get 950, or 158 per year. That makes a rate of 2.4 per 100,000 residents.
http://news.bbc.co.uk/2/hi/middle_east/3694350.stm Now let's look at U.S crime rates for 2000 (all in per 100,000 residents):
http://www.disastercenter.com/crime/nycrime.htmCalifornia: 6.1
New York: 5.0
Georgia: 3.3
Oregon: 2.0
Connecticut: 2.9
Vermont: 1.5
So looking at murder rates, Israel is safer than Vermont. Including the occupied territories, Israel is still quite a bit safer than Connecticut or Georgia.
So why do Israel's much lower murder rates justify such drastic action? Fear is a powerful motivator, and I do not doubt that the fear of suicide bombers and Hezbollah attacks that people feel is real. So the question really is, who actually benefits from Israeli military attacks? I think that most of the 90+ percent of Israelis who support this current action do not. Throughout the world, fear mongering has proven to be a very effective means for politicians to gain and keep power, I don't think this works differently in the Middle East.