If it were true that violence breeds violence then Jews would have blown up post war Germany with suicide vests. It was still filled with Nazis and their collaborators.
Hamas is a different story, there's no amount of negotiations or compromise that will placate a fanatic. They will probably keep doing these things forever just like Isis didn't fully go away. But once the leadership got cut down Isis found it much harder to pull off the same level of terror.
I agree that this needs to be a dual motion. Young frustrated people are kindle for these organizations and this won't work without a peace process that would give hope to the people. That's why I don't have any faith in the current Israeli government. I hope it can be replaced so there would be a parallel process that would help rebuild and pave a way for peace again.