How did they handle it before? Do you mean when they "gave up" Gaza?
They pushed a 'No go zone" like the Muslim areas of Europe under the erroneous thinking that if one removes elements supposedly causing hostility problems will go away.
Instead and predictably, removing the Jewish population from Gaza introduced Hamas which fomented added anger toward the Jewish state.
Led by Hamas, productive land and infrastructure was destroyed, and greatly decreased the quality of life in Gaza, not to mention the increased terrorism threats from rocket attacks, and the sea access to resupply the terrorists.
Unlike your 1,2,3 analysis, this remains an alternative course of action, as it was for the 50 years it was held by Israel.