Thus Hezbollah places its rockets and other potential targets in homes, knowing that Israel cannot hit back without creating collateral damage. This does not relieve Israel of the burden of minimizing civilian casualties as best it can. The point is that if Israel has to operate under a code of ethics that renders civilian deaths unacceptable, then it automatically loses. The ramifications would be dire and ultimately aid the cause of Islamic radicals in such a way as to bring about many more innocent deaths over the long run.
Israel says every one of its airstrikes has a specific strategic and military rationale. The attacks on Lebanon's civilian infrastructure are not "collective punishment," they're an attempt to prevent Hezbollah from transporting the captured soldiers to Iran and to prevent Iran and Syria from resupplying Hezbollah. Where Israel has bombed civilian areas, it has been in an attempt to strike Hezbollah's rockets.