The attack in to Israel which came by way of Gaza terrorists infiltrating from the Sinai indicates the true state of affairs in Egypt – a significant part of Egyptian authority is willing to aid terrorist attacks against Israel. This new fact by itself nullifies the Israel-Egypt peace treaty – we’re essentially back to 1967.
The proper response by the Israelis would be to push the Egyptians back from the Gaza and Israeli borders – at least 25 miles so as to put southern Israel out of easy rocket/terrorist range. This would also allow a complete sealing off of Gaza and that would eventually result in the terrorists in Gaza running out of ammunition.
Remember, the Israelis gave up the Sinai in order to have peace with Egypt – unless the southern border of Israel is 100% secure against attack, there is no reason for Israel to stay out of the Sinai. And it is better to act now than wait for the Egyptian government to move major military forces in to the area.