Hamas can't defeat Israel because they are too weak and Israel can't defeat Hamas because Israel won't (can't) use its fool power to annihilate Hamas and other jihadis who would take their place if crushed:
War's purpose is to impose your political will on your enemy. But unless the Israelis surprise us immensely, nothing decisive will come out of this conflict.
This is interesting because it occurred to me that the calls by some in the West for Israel to respond "proportionately" to Hamas' rocket attacks reflects a pre-modern notion of war that has nothing to do with imposing a political will on an enemy.
Israel is not being harmed much whether from Iron Dome or good civil defense, so the critics argue that Israel's attempts to stop Hamas from firing rockets is "disproportionate."
That this standard is not part of the rules of war is another issue altogether. But the idea that Israel should respond to ineffective war with their own version of ineffective war reflects pre-modern thinking about warfare.
The 2014 Hamas War of the Children (whether you want to focus on the murder of 3 Israeli kids that really triggered Israel's response or the death toll of Palestinian children in Gaza during the response) is symbolic and so is pre-war in both the minds of Hamas and the critics of Israel who respond to symbolic war with real war.
Pre-modern war was not as Clausewitzian as we in the West conceive of War. And if you try to think of Hamas' attacks as a Westerner would and wonder why they risk casualties in a seemingly futile effort to kill Jews, you won't get very far.
While pre-modern war could get bloody, it often had formalistic early stages that could either end the conflict or serve as a waypoint to more violent phases. Hamas certainly wants to get to the bloody kill all the Jews stage, but right now they are satisfied with the symbolic phase of showing they can strike. It's all a lot of prancing about, yelling, and chest thumping.
Israel, Hamas complains, should not be jumping right to the bloody phase. And critics in the West seem to agree, with their odd notion that Israel should only respond "proportionately" in violence levels.
Suffering casualties as Israel tries to stop Hamas from firing ineffective rocket barrages is just part of the symbolism stage, letting Israel figuratively punch Hamas in the chest repeatedly to demonstrate that Hamas can take it (with a side benefit of propaganda videos of dead civilians).
If Israel cannot inflict a Clausewitzian defeat on Hamas and impose their will on the Palestinians of Gaza, perhaps Israel will undermine Hamas by fighting a war as symbolic as Hamas is waging:
Israel escalated its military campaign against Hamas on Tuesday, striking symbols of the group's control in Gaza and firing tank shells that shut down the strip's only power plant in the heaviest bombardment in the fighting so far.
Dead Palestinian children don't deter Hamas from shooting as Israel. Maybe shots at Hamas' image of power and control will have an effect on the leaders of Hamas.
UPDATE: Strategypage addresses the Arab Dead Civilians Gambit that Hamas is carrying out.