Grunherz, the IRA continued to bomb British and loyalist targets, but the British didn't send in the tanks, bulldozing the homes of suspected IRA terrorists. They didn't machine gun rock throwers either. Only once, in 30 years of conflict, did things go a bit nuts and that was right at the start.
Only when a dialogue was started was any real progress made. Yes, sometimes you have to talk to terrorists, even those that would like to see you destroyed.
It is unrealistic of the Palestinians to expect Israel to dissapear. It is unrealistic of the Israelis to expect Palestinians to be satisfied with living as third rate citizens. A compromise suiting both sides must be found.