There is no better way to put an end to Palestinian terror, or any other kind of terror, than a quick, surgical strike. In times like these, when Israel is in the midst of a fierce battle with the Palestinians, and Gilo and Psagot are being fired upon, one cannot pick and choose.
Moral considerations are also irrelevant.
At the moment, our only interest lies in results. Hezbollah may have blown up the embassy building in Argentina after that, but that's a different story. The assassination of Abu Jihad paralyzed Palestinian terror. The killing of Islamic Jihad leader Fathi Shikaki, another famous hit, convinced his men to raise the white flag. Eight months ago, the IDF withdrew from Lebanon.