Hezbollah has to be very careful because Israel has clearly stated that any attack by them from Lebanon will be considered an act of war and therefore Lebanon itself will be held responsible.
The Palestinians will only be counter attacked if they were responsible in any way for the killing of the two soldiers.
Hezbollah is playing with fire ...it doesn't want to stir up a civil war situation within Lebanon.
I think it goes without saying the Israel military is planning their counter attack at this moment. An inkind would be at least two dead Hezbollah soldiers. The most significant aspect of the reprisal is where. As you state Lebanon is now considered within its right for Israel to strike. A strike to Lebanese soil would seem to be the most advantageous for Israel as it then forces Hezbollah to rethink its balance of forces. Lebanon was really wary of Hezbollah keeping its military rather than becoming part of a national military after the war of 2006. Hezbollah insisted it needed its military to defend Lebanon effectively. Nasrallah was then pressed hard to explain why Hezbollah was going to Syria. The reasoning was that if Syria becomes unstable then Lebanon is at risk, there was also the rational of it was a debt due Syria. If conflict flares up on Lebanon's southern border Nasrallah could face a resurfacing of why Hezbollah is allowed to keep an independent military in Lebanon. If Israel escalates Hezbollah could really find themselves with one foot on the boat and one foot on the dock and the anti-Hezbollah Lebanese giving them a kick in between.
I'm going to reply to myself here since what I thought would happen did not, in a way. Rather than attacking Hezbollah Israel decided to sit tight. Israel did do something noteworthy though, they blamed Iran directly. So while the back and forth is quiet now Hezbollah said the if any of their people are assassinated anywhere they are blaming Israel and Israel said if Hezbollah attacks Iran is getting blamed. So looks like things are escalating, quietly.
