I agree with your general sentiment but like others have asked how is it implemented? Israel has tried. People forget that the area of Gaza was occupied by both Egypt and the Arab League, both of whom did not give a shit, allowing it to fester into an area with deep roots into terrorism. There was then a war in the late 1960s, Israel took it over, gave Gazans the freedom to self govern and gave them jobs as a starting point. I fully accept that not everything was roses but it was a decent starting point from which they could have prospered.
The minority (and I accept it is a small number of the whole population but it is not insignificant) of the population that you mention started killing their own because they did not subscribe to the idea that arabs can work for israelis. Israel gave them gas, water, medical supplies. Israel gave them the tools and resources they needed to build. Israel helped them build schools, hospitals, medical training, nobody mentions any of this. As the occupiers/owners/landlords (take your pick) of the land following appalling Arab occupiers/owners/landlords (take your pick), Israel had done an exceptional amount for Gazans.
So I totally agree with you, it is better to give the tools to prosper as a way forward, but people don't realize that Israel tried that. People only see the current situation. People compare the quality of life of Gazans to Israelis and assume that Israel must be the oppressor because of this nonsense of occupied land, which is nonsense given the actual history for why Gaza is 'occupied'.
Why did it not work? In any society you end up with extremism. In my view Israel has similar mentality problems with its Ultra Ultra Orthodox Jewish population so Gazans are not alone. The issue is when it gets out of control and those extremists take control of the society, they influence the way society thinks, people are then too afraid to speak up and then just turn a blind eye provided they are allowed to get on with their lives. They influence children, teachings at school, allowing a new generation of society born into hatred on propaganda. But that thinking is very short term and the long term damage is what people now see before them.
Israel has tried multiple times to deal with the extremism in Gaza. It probably had hoped that Gazans could deal with it themselves given the jobs and resources they were given but for what ever reason they haven't. Nobody else in the world would help and in my view the UN could have been pivotal here but failed.
Personally I think it could have worked had the Arab Nations and rest of the world got more involved to help Gazans deal with the extremists in their society at the time in the 70s when Israel gave them jobs and resources. They didn't and it was allowed to get out of control.
An event horizon has now been reached where extremists have too large a grip on Gazan society and the society as a whole has outstripped available resources. Totally dire and sad but a misconception that alternatives have not been tried before.
Sadly in this area it is a religious issue. Until the Muslim Nations around Israel accept its existence and do not continue to fund the terrorists, the Palestinians will forever be in this vicious cycle. They will be given resources to prosper (as they have been given multiple times) but they never will because extreme ideologies will continue to cripple them.