Ralph Peters thinks so. And while this view strikes me as premature, the following I think is true: (1) Israel will lose if it does not push Hezbollah out of southern Lebanon and (2) Israel probably cannot push Hezbollah out of southern Lebanon without a large-scale military ground effort.
More generally, I believe that Israel cannot prevail against its enemies if it is unwilling either to occupy problematic territory such as southern Lebanon or invade it when the lack of an occupation force leads to the kind of trouble we’re seeing now.
UPDATE: Israel has taken control of a village in southern Lebanon which reportedly will enable its troops to overlook Hezbollah command posts in the area. In doing so, Israeli soldiers found a mosque that contained stockpiles of weapons, including rockets.