especially since the Palestinians made them look stupid, even if they achieved nothing else by this battle. The Mossad certainly did not see this coming. The Palestinians even deployed personnel from paragliders which somehow evaded Israeli air defences. How was such a huge, elaborate, and well-coordinated offensive not detected?

I think you are probably right about the rationale for the attack, but if it doesn't achieve that Gaza is going to be put in an incredibly precarious position. They have even less strategic depth than Israel (you could walk across the Gaza strip in less than an hour) and if push comes to shove the Israelis could simply flatten the place and/or kick everyone out. Gandhi's non-violence only worked because the Brits weren't terribly inclined to massacre the Indians on a large scale. It might be different in this case.