I think after that attack Israel are well within their rights to attack any military targets of Hamas they see fit, I don't agree with cutting off water and food supplies to anyone it isn't the medieval times you aren't going to starve them into submission only the civilians will be harmed by that.
Hamas knowingly use their population as human shields and purposely use civilian infrastructure for military purposes, they use guerrilla warfare against a modern army whose only form of retaliation can be dropping bombs or a land war into a densely populated urban area. If Hamas cared about their children they wouldn't carried out that attack at weekend.
No idea what the solution is or what is feasible, one religion dominating and ruling some of the holiest sites in 3 different religions is not good as their is a clear bias and pilgrims of other faiths are spat on and treated like shit at times. Personally think an international peace keeping force needs to be involved and both sides forced into some form of agreement or face sanctions.