Sounds like a good plan to me. As an added benefit, nobody can wail and moan like they would if the Israeli’s use gas. The water will simply make the tunnels unusable.
A lot depends on percolation and soil mechanics. It could well cause buildings to collapse. The first result will probably be a failure of the electrical system, then the ventilation system. If the water penetrates the floors and saturates the soil under the tunnels, the tunnels may sag and collapse. Continued injection of water may cause the foundations of nearby buildings (built to the strictest Palestinian codes!) to fail and topple, like that apartment building Florida a few years ago. The possibilities are as delightful as they are numerous!