To be honest, I don't think things would be much different. If Hamas took only military personnel hostage, the IDF would still be bombing Gaza and demanding they be returned.
When Gilad Shalit was taken hostage Operation Summer Rains followed. That was one soldier. You really think if Hamas took hundreds of soldiers hostage, they wouldn't go bomb Gaza?
Literally everything other than terrorism!
You can fight a resistance without killing kids at a concert. Remember the videos of Ukraine treating its POWs well? Imagine if Hamas had restricted its targets to military assets, released all non-active duty hostages, and then released videos of them being served tea and hummus while Israeli planes pounded above. How different would the narrative be?