Israel is poised to launch a major military operation in Gaza, which threatens to undo its withdrawal from that territory, and cause major civilian casualties (which, in fact, would serve the interests of the factions involved in the kidnapping), not to mention further casualties among IDF forces. What if, instead, Israel informed the kidnappers that if harm comes to Shalit, Prime Minister Olmert will call on the Knesset to immediately institute the death penalty for terrorist murders, and apply it retroactively? Instead of securing the release of terrorist prisoners, several dozen murderers in Israeli prisons (who richly deserve it, anyway), connected by political or family ties to the kidnappers will be executed. I'd much rather see the lives of guilty terrorists threatened than IDF soldiers and Palestinian civilians.
Relatedly, Israel should institute the death penalty for terrorism, as keeping leading terrorists in jail has for decades given their compatriots an incentive to hold hostages in the hopes of securing their release, and Israel has frequently capitulated to such demands, with some of the released terrorists later committing further atrocities. I fail to understand what purpose is served by the consistent repetition of this scenario.