DEPARTMENT OF "HELL FREEZES OVER:" I never thought I'd be endorsing a piece by Eric Alterman, much less reproducing it in full. But credit must be given where due. Here are his thoughts on the Israeli killing of Sheik Salah Shehade, the Hamas arch-terrorist:

I don’t know if killing the military chief of Hamas, together with his family, is an effective military measure-as surely someone will rise to replace him and it will make a lot more people angry, perhaps even angry enough to become suicide bombers. It may not bring Israel and the Palestinians any closer to peace or mutual security. But I don’t have a moral problem with it.
Hamas is clearly at war with Israel. Hamas feels empowered to strike Israeli civilians inside Israel proper and not just on the war zone of West Bank. Sheik Salah Shehade could have protected his family by keeping away from them. He didn’t and owing to his clear legitimacy as a military target, they are dead too.
So tough luck, fella.
War is hell.

The irony gets even richer when you consider this Jerusalem Post item, which argues that the killing of Shehada's family may indicate a shift in Israeli strategy:

Top generals said that had they known innocent people would likely be hurt they never would have approved the strike.
Come on! Really!?
This is the same IDF that has been praised for excellent intelligence involved in dozens of targeted interceptions of terrorists over the past two years.
These claims are dubious. And besides, what was the military thinking? That it could send in a fighter bomber and blow up a man's house and only he would be killed?
The strike on Shehadeh which killed his wife and children and other apparent innocent civilians is a turning point in Israel's war on terror.
This marks a definite change in policy and the question remains whether this change will boomerang and lead to the deaths of more Israelis in revenge attacks by Hamas.
...Perhaps the IAF was ordered to deliberately target the family of the Hamas leader as a warning to others. And this is something that has to be taken into account.
And why not? The government has finally started thinking that it had to do something to deter terrorism and is taking actions against family members of terrorists.
It demolished the homes of those who were involved in the Emmanuel bus ambush, and it has declared its intention to deport family members of terrorists.
Not even Alterman implies that the Israelis meant to kill his family as a matter of policy. Imagine: Eric Alterman goes easier on the Sharon government than a Jerusalem Post columnist!
I doubt the attack really represents a major change in policy; it seems more likely that the civilian deaths were a result of an unholy combination of mistaken estimates of civilian presence and desperation to finally get him (see this piece for an account.)
Also, check out Amir Oren's article on why killing Shehade was good policy for peace:
[C]ompared to him, Sheikh Ahmed Yassin is a moderate. The old considerations, from the days of Yihiyeh "the engineer" Ayash, about whether the assassination ignited a cycle of provocation and reaction, may still be true in principle, but have lost their practical meaning. Last week in Washington, former Shin Bet chief Yaakov Perry said that Ayash - most of whose attacks were committed during Perry's stint - needed three months to recruit and prepare a suicide bomber, operationally and ideologically. Now it takes hours. Mohammed Dahlan, reacting by phone from Ramallah, said that in the past, the people who send the suicide bombers into action had to look for bombers. Now the bombers are looking for people to send them.
With so many soldiers ("bomb-fodder") in the Palestinian death cult, the impact of the loss of a general like Shehade may well outweigh the marginal increase in volunteers and/or motivation for terrorism.
UPDATE: John Podhoretz points out that Israel's actions were permitted under the Geneva Convention.