Oddly enough I would advocate Israel use their limited defense dollars for enhancing and refining their nuclear arsenal. They should let it be known that they will not maintain conventional forces that are capable of repelling an all out conventional attack on Israel from several nations i.e. Syria, Egypt, and the portions of Lebanon that are under control of Hezbollah and Iran as it is the primary controller and funder of Hezbollah.
It should also be known that their new strategy is to use tactical nukes, against opposing invading forces on their borders. Let is also be known that they will nuke the industrial centers with 250 Kiloton weapons and populations centers of nations that are supporting an invasion of Israel. Israel should let all civilians in the enemy camp know what will happen in case of war and plead with them to flee those areas, least they be dead.
In the case of the current daily barrage of missiles that are launched against Israel, let it be known that the site of launch will be hit with laser guided 500 lb conventional bombs. The bad guys will be gone but since most are launched from civilian population centers many will die.
Hiroshima and Nagasaki worked. At that point in the war they were not important as strategic centers. The bombs were instruments of terror and it worked. If we had not used nukes on Japan it was estimated that we would have had a million casualties and of these 150 thousand or more deaths. Terror works.
War is ugly business. If you can, "CRY HAVOC AND LET SLIP THE DOGS OF WAR, and your enemy knows this, you will not have to go to war unless the enemy is totally deficient of reason and thus fanatical. If he is fanatical and without reason you must kill him at some time in the future or he will kill you.
If you are not prepared to kill your enemy and all that stand with him, surrender for he has already defeated you.