I think Hamas knows that they're done in Gaza. Releasing the hostages isn't going to stop that. They're trapped behind a million civilians, and they misplayed that hand. Israel has always been willing to kill 50 thousand Arabs at the drop of a hat, and now there's a perfect excuse. I'd imagine if they aren't up to 50 thousand now, they soon will be. Starvation, disease and exposure will explode that number.
And while no one's looking the "settlers" can go after the rest of the West Bank. That's bonus points! (Why is no one willing to say radical Judaic terrorism? )