to end this kind of random attacks one must get after the people that promote this action . identifying these people and paying them a visit to discourage such incitement might be a good idea. the young people who do these acts are stupid and impressionable to give up their life. they are not the root cause.
#3 is spot on. Go after the head of the snake and work your way down. Arafat, Abbas, Haniyeh, etc. Make them sleep with one eye open no matter what country they are hiding in. You threaten Israel you become the enemy of Israel. Utilize Mossad to reach out to them. In the mean time cut off any and all aid, jobs, etc to the philistines. No matter how many olive branches Israel hands out they are always demonized, let them feel the stick this time.,