The Israelis, I believe, realized that the chances of getting their soldier back was slim. Their objective is simple: retaliate in a harsh manner to discourage future acts of kidnapping. You see the consequences of not acting with the US led colition in Iraq. The US didn't retaliate harshly enough and now it is a great way for the rebels and insurgents to grab international media favor as well make further gains in their enterprize in Iraq. But now in Israel, the kidnappers made one huge mistake: the IDF knows where they are, in Gaza. It doesn't matter how big Gaza is, in fact the bigger the better. The importance is that its a location that can be invaded. The Israelis are sending a a very powerful message right now to Hamas and Hezbollah: Engage in an act of war, and we will be unmerciful, and we will not hold back.
Jordan foreign minister says to speak with Kerry on Israel-Palestinian conflict (Reuters)
from the article: Army to decide on lowering alert in north; Qassams hit Negev