global commendation
I think you mean condemnation, not commendation. They're pretty much the exact opposite in this scenario.

On the other side, if Israel puts a full stop on this, the internal outrage at government failures will grow louder. With a leader so keen on self preservation as Bibi is, I'm not sure that he sees peace as being in his best interest.
You're probably right but I hope you're wrong. Bibi is already facing a domestic backlash for the initial security failings and I get the impression that there's an increasing number of Israeli who are finding the response distasteful. I've seen quite a few interview including victims families where they express that it's starting to feel like revenge rather than a attempt to recover the hostages. I can see a path where he could spin an "I negotiated and recovered the hostages" line and save face that way.