They should but that would only help with the west bank. As long Hamas is there, there is a security threat and Hamas can hide behind civilians. But even if Israel dismantles the current Hamas structures, in a few years they or something similar will be back.
There are 2 million people in Gaza and no perspective for any improvement of their situation. Gaza is economically viable on it's own. But neither Egypt nor Israel wants to incorporate Gaza and it's inhabitants into their states.
How long will the mellowing out take and how many Israeli civilians will die during that? Half of the people in Gaza were born after Hamas came into power.
Ireland is a viable economy on it's own. The average education level in Gaza is abysmal, there are no resources, little farmable land,... There is no perceivable way for Gaza to function as a independent part of Palestine independent of either Israel or Egypt. So what's the plan here?
Egypt wants nothing to do with Gaza anymore. I don't think anyone in Israel would support incorporating Gaza into Israel and grant citizenship to it's inhabitants.
Just closing the border and largely keeping out there is what Israel did the last two decades and that is exactly what ended up in an unprecedented terror attack on Israeli civilians.