"Does that mean if someone repeatedly punches you in the shoulder, that you repeatedly punch them in the shoulder?. Do they then escalate and punch you elsewhere, you respond in like fashion..."

In a word, Teribus...yes. Exactly that. If I am a nation-state with an armed forces, then that is what I would do, figuratively speaking. I would not reply to a "punch in the shoulder" by immediately chopping the other guy's head off with an ax or shooting him dead with a revolver, which appears to be what you are recommending. ;-) I think that's because you assume you're a whole lot better and more valuable than the other guy, so it doesn't really matter what happens to him if he has the nerve to punch you. I don't make that assumption.

Nor would I ever claim that I have the right, as a nation-state, to launch a first attack or a pre-emptive attack on another nation-state (as the USA & UK did to Iraq in 2003). I do have the right to respond to an attack by another nation-state with a similar degree of force, however, and that is what mutual deterrence is all about. That's why I suggest that it's a lot safer when neither side feels it can risk a major war with the other.

"As an Israeli LH what would be your thoughts on the situation in general, what would you do - something vaguely approaching realistic and natural would be good for an answer."

I would protect the borders of Israel and the people of Israel with every force at my command. I would continue maintaining an elite military sufficient to deter Arab states from open war. I would not make land invasions of Lebanon or anyone else, but I would defend my own border areas vigorously against any attacker. I would not make pre-emptive attacks on other nations. I would not keep expanding Israeli settlements on occupied land taken in Arab-Israeli conflicts, nor would I build a security wall in those areas. I might very well build a security wall along the Israeli borders themselves, however. If rocket attacks were made from Lebanon, I would reply to those attacks with artillery and airstrikes aimed at the people launching the rockets. I would negotiate a gradual return of the occupied lands in the Golan Heights and the West Bank, and I would gradually move the Israeli settlers out of the occupied areas, compensating them (the settlers) fully for whatever losses they suffered in that process, so that they would be able to re-establish themselves in Israel itself. I would openly declare to the world that yes, I do have nuclear weapons...approximately this many...and I am ready to use them anytime on anyone who launches a nuclear attack on Israel...or a conventional attack that appears to endanger the national survival of Israel (a successful Arab invasion, in other words...which is quite unlikely to occur, given the superiority of the Israeli forces on the battlefield).

I would enter into negotiations with the Palestinians and the various Arab states to see if together we could work toward establishing a Palestinian homeland that is sustainable and a general end to hostilities (mind you, I would do it fully aware that it might lead nowhere...but to give it a try is better than no try at all). I would expect the Arab states to also be willing to contribute to making that possible....it's not just Israel's responsibility alone to do it.

I would promise not to attack any Muslim nation-state that does not attack me first (with its conventional armed forces).

I would do everything possible to sustain Israel and defend it, but not by taking over lands outside the original borders of Israel. I would remain vigilant, well armed, and fully capable of repelling attacks on Israel.

In fact I am recommending the same form of legitimate self-defence for Israel which I would recommend for any nation that was under outside threat.