I'm the type of S.O.B. that would presume the hostages are already dead, or, shoot the hostages first to deny terrorists the value they hope the hostages will offer.
Ask yourself, what would Stalin do? Stalin was probably wone of the most purely political creatures to walk the Earth. At Stalingrad and Leningrad he gave Russians a choice ... to be shot by the fighting Germans, or to be shot by the Russians if they retreated.
If you value hostages you play into terrorist hands. Shoot the hostages first, then the terrorists.
If Hamas wants a war of elimination, let's give it to them like we did in Dresden, Tokyo, Nagasaki, and Hiroshima.