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"So what *would* you do, as a self-described wishy-washy liberal (I hope that was you:) to stop the rockets?"
What needs to be done to stop the rockets in the long-term would not stop them in the short-term. And that's a problem.
I know this is all hypotheticals, but bear with me. For a terrorist organization to thrive it must have significant support from the people it purports to be fighting for, e.g. Hamas and the Palestinians (who elected them), or the IRA and Irish and Irish/Americans, or the ANC and black South Africans, or Irgun and Zionist Jews. If you remove that support, the organization withers.
Hamas's anti-Israel rhetoric would be weakened if it could be demonstrated to ordinary Palestinians that Israel is not a direct threat to them and that some sort of two-state solution is possible in the near future. What's happening now in Gaza, of course, sends all hopes for peace back to the drawing board.
Israel could take a giant step in the right direction by rolling back its illegal settlements, ending the blockade of Gaza, and having serious negotiations with Hamas. And it would have to be Hamas as that's all there is at the moment (Fatah is dead and buried). It is possible for Hamas to negotiate themselves into becoming a more-or-less mainstream organization, as happened with Sinn Fein and the ANC.
I know this wouldn't be easy. It wouldn't stop Hamas in the short-term firing rockets into Israel. It might be very difficult to sell it politically to the Israeli (and American) electorate as it would be seen as 'rewarding' Hamas.
And it WOULD be a genuine concession by Israel, which I'm sure many Israelis would regard as a sign of weakness but in reality is a sign of strength - a belief in your own future.