My idea of a solution

Since the respective leaders seem to have no answer except to blame everyone else, and continue with total slaughter until everyone is dead, I thought I'd give it a try:

1. The three kidnapped soldiers are unconditionally released into British custody, where they are held securely, but not killed (unless they look Brazillian!) or otherwise harmed.

2. The Israelis in return agree to submit to binding international justice from three judges from say Iceland, Switzerland and Canada, for all Lebanese and Palestinian prisoners whose release is now demanded. If the judges conclude there is a case to answer, they stay in custody, if not, they are released.

3. After the first release of the first say 20 lebanese/palestinians, the IDF recruits are repatriated from UK to Israel

4. Both sides stop shooting at once and withdraw.

5. The international judicial panel completes its work in months and their recommendations for release are mandatory and the agreement irrevocable.