There is much commentary to be found about how the Halacha is clear in prohibiting the proposed prisoner exchanges for redeeming Gilad Shalit. Their argument is based entirely on the Mishna prohibiting paying more than a hostage’s value for redemption, and they cite as the conclusive precedent the case of the Maharam, Rabbi Meir of Rothemburg, who refused to be ransomed exorbitantly so as not to set the precedent for taking Jews hostage. But one can distinguish Rabbi Meir's position in that his life was not in immediate danger the only real value to those who held him was whilst he was alive and secondly he took the decision not to be redeemed - Gilad Shalit has not been asked and so one must assume he seeks freedom. There are at least three avenues from within the Halacha that allow for the redemption of Gilad even at the excessive price of the proposed human prisoner exchange. These options include:
1) Paying more than the Value of the Hostage is allowed when the Hostage’s life is in danger, as Gilad’s certainly is.
2) A person may ransom himself at any price– Rav Yisroeli showed how Gilad as a member of the IDF is during the term of his service, one with the State, and therefore the State’s paying an excessive amount to ransom him is as if he is ransoming himself.
3) It may be required to risk our own lives to save the lives of others, but if it is not required, it may certainly be a voluntary decision to do so. Thus, the citizenry may voluntarily assume the risk of releasing dangerous prisoners and encouraging the practice of hostage taking in the future, in order to save Gilad’s life now.
Please see http://www.eberlatlivinglab.org/halacha-of-redeeming-gilad for a fuller explanation
Unfortunately Israel should have completely cut-off Gaza from all services provided by Israel and simply folded its arms and told the world if you want us to turn them back on tell Hamas to free Shallit.