I could be way oversimplifying this, though.

No, I don't think so -- or at least to simplify is the central goal of logical argument. Gaza is a complicated mess; asking simple questions about it and agreeing on the answers is the only way to build a coherent idea of what is happening and should happen there. Unfortunately even straight answers to the basics are hard to come by at the moment.

Is Israel's reaction to Hamas really going to change the way the world responds to terrorists and urban guerrilla fighters?

This is one I can take a stab at, however. I think the author's reasoning flips this question around: if Israel had been as dovish all along as the world wants them to be now, would there still be an Israel. Maybe. It wouldn't resemble what there is today, for better or worse. To put it another way -- Israel's reaction may not change a thing for the world's fanatical terrorist groups, but its nonreaction would. Or at least, the hawks think and have thought it's too big of a risk to take.

I have the sneaking suspicion that all of this justification comes after the fact--that the author's position is a foregone conclusion, and any perspective he has of the conflict is going to be viewed through that lens. I don't think he'd accept the argument that principles should be valued more than innocent lives if it came from the other side.

Possibly. Regarding the periodical for which he writes, this is certainly true.

What is more important, people or principles?

One central irony is that both Hamas and the Israeli coalition government would probably give the same answer. A nod to the Onion for providing the most incisive commentary of the entire affair?