You're wildly underestimating the influence of the hard liners in Israeli politics..."Eretz Israel" is still the goal for many, particularly within the IDF and the Mossad, and has always been a major motivation for their land grabs and for the expansion of settlements.
What you fail to acknowledge in recognizing the strategic importance of those land grabs is that the entire settlement structure is, by design, a huge human shield. The Israeli's love to justify their attacks on civilian targets by blaming Hamas for fighting amongst civilians, but they're worse in that regard by far.