I'm also, I like to think, realistic, and realistically, war is just diplomacy by other means. Wars happen because someone with the power to go to war decides there's more to gain from the war than the price of the war.
The world has been tantalizingly close to a peaceful Middle East many times, and there's always one party or another who shits all over it. The only way I can see peace between Israel, the Palestinians, and Israel's Arab neighbors is for enough of the parties to the conflicts to see more to gain from peace than from war.
I think Hizbullah* made a cynical, calculated decision to provoke Israel, and they saw things turning out the way they have in advance. I have no sympathies for Hizbullah, but you have to admire their cunning. With a tiny effort, they have provoked a huge response that is very unpopular, both in the Arab and Western nations.
Hizbullah yanked Israel's chain, and the Israelis did what they did without a second thought. But Israel was played. They could have put their citizens in shelters, or moved them out of the North, and put on a full court diplomatic press to get their soldiers back by peaceful means. I doubt that Hizbullah would have kept up the level of rocket attacks on Israel if they weren't being attacked; they would have no grounds to claim moral equivalency. And, incidentally, Lebanon's civilian infrastructure would be intact, and hundreds of Lebanese civilians would not have died.
This is, after all, still a world where there is a powerful plurality of nations of the world who will attempt to solve problems without bloodshed, for whom the moral high ground matters. Diplomacy would have work eventually, because even Hizbullah fighters need clean socks and bread. Without public support and the argument of moral equivalence, Hizbullah stands naked as a bunch of thugs, and reasonable people everywhere won't be sucked into support their actions.
A commonly quoted story about Quaker pacifism is this one: William Penn, as a English noble, was expected to wear a sword at all times. He asked George Fox about being a Quaker and wearing a sword, and Fox didn't tell him to take it off. Rather, he said "Wear it as long as thou canst." The point being, that even in an imperfect, often violent world, if you accept the view that war solves nothing, you eventually must let go of the weapons of war, and find other ways to defend yourself or avoid violent conflicts in the first place.
Israel, eventually, will have to see past an eye for an eye violence, because there's never an end to it. They might not immediately or totally quell the violence against them. But their current tactics of assassination, bulldozing people's houses and all out war only engenders more support for Hizbullah and Hamas, and starts a new cycle of violence and revenge. Giving up violent retaliation as their weapon of choice robs Hamas and Hizbullah of their most valuable property -- a brutal bogeyman of an enemy.
*I use Hizbullah because that's what they use on their own English Language Websites. It is, after all, an arabic word/phrase, and any transliteration into roman letters is necessarily imprecise and arbitrary.