I think Israel is shooting itself in the foot.

Their best hope for reducing hezbollah's influence is for a strong lebanese government. One that governs well so that the country has prosperity, a prosperity that the population at large has a vested interest in maintaining and one that enforces the laws so that it locks up hezbollah members that don't care about prosperity anyway and are plotting and to do violence against israel and others.

By destroying so much of the public infrastructure in lebanon all israel accomplishes is the weakening of the lebanese government, and probably one of the best recruiting campaigns ever for hezbollah.

My impression is that with Sharon out of the picture, the current coalition government in israel is very weak. And that by beating the crap out of lebanon they are appealing to the war hawks to strengthen the coalition at a very heavy price in reduced national security in the near and forseeable future.