The military leadership does not want a war it knows it can't win, that's correct. This is why it has more or less openly rebuked the government on at least one occasion: pointing out that Hamas is an idea, for instance, and that you don't destroy an idea with bombs and bullets (note these things can destroy a city or a people).

Israeli society appears to be splitting. There is now a faction which is openly eschatalogical in not only tone but core epistemology and which exerts growing control over the state.

The fact that Netanyahu remains seated atop this increasingly schizophrenic tiger is not evidence of sound leadership or any real desire for peace, it merely demonstrates adroit maneuvering on his part and the subservience of the American political class. Before last October a decent fraction of Israeli society wanted to see him in a courtroom.

I think it's becoming less and less meaningful to speak of what "Israel wants". For that matter, the same may be said of the United States, whose foreign policy one would be hard-pressed to call coherent. One common factor appears to be an inability to recognize that other nations may have legitimate security interests, another seems to be indiscriminate paranoia, and intransigence a third.