Ok, I'm gonna actually weigh in. Just my two cents as I'm not expert on the region.
From what I'm reading, it seems like a lot of people are saying that Israel has no incentive to extend any good will to the Palestinians as long as Hamas is shooting rockets at them. Perhaps as a matter of domestic politics, this could be the reality (I wouldn't know), but generally speaking, I don't agree.
There's no denying that Palestinian leadership has been completely unreasonable in the past, making peace difficult to impossible, but it wouldn't be smart of Israel to adopt the attitude that since the Palestinians are weaker and unreasonable, it's fine if they wanna keep getting perpetually sonned with no peace in sight. As I see it, this ongoing conflict really gives others in the region a cause to hate Israel. In truth I think a lot of them don't give a shit about the Palestinians, but it still becomes something to rally around. It's really not good for Israel to be pissing off the whole middle east by killing Palestinians, building settlements, demolishing homes etc while they simultaneous are getting ready to confront their much larger concern of preventing Iran from getting a nuclear weapon.
My guess, and it's just a guess, would be that most of Israel's neighbors would also prefer not to see Iran get a nuke, but of course the politics of this region are such that, even so, it's tough to imagine them supporting Israel making a move. That said, the dinky little rockets that Hamas lobs at them seem like small potatoes compared to the issues that really concern Israel in the region, yet the conflict they have with Palestine is one that really polarizes people and causes a shit ton of ill will.
Some of what I said may not be exactly on point, but I do think my main point stands: Over time, this perpetual conflict is really against Israel's interest.