Kill all men and enslave the women and children?
That's what victors did historically.
Seriously, since you mentioned "common sense" and that usually goes together with a strong connection to reality. The reality is that as an end goal, shrinking Gaza will not accomplish anything for Israel's security. The 2 million and counting radical terror supporting population will continue to multiply like frogs and raise new generations of terrorists. When (!!) Israel wins this war they'll need to figure out how to establish a government which will totally revamp everything from scratch, most importantly focusing on education and uprooting Hamas's terror indoctrination.
Realistically, the only thing that truly ensures Israel's security is complete annexation and dismantling of Gaza, including redistributing the population to other countries. As long as you have an "other" on your border who harbors a victim's mentality and a suicidal ideology, there will always be an extremely high risk.
Also realistically, this will never happen. The world won't let it, and Israel will never have the stones to risk worldwide alienation to even suggest it.
So reality becomes a sliding scale of sorts, where Israel needs to determine how much risk they are willing to absorb, both from a hostile entity in Gaza, and on a hostile world stage. There is no right answer when is comes to risk appetite. As they say, toloi b'hergesh.