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that it was militarily necessary to do that sort of damage even though it was inevitable large numbers of civilians would be caught in the crossfire?

I honestly don't know, but I can guess why they are doing it that way. I read one report that in one suburb of Gaza City, almost half of all buildings were rigged with explosives by Hamas. In another place, there were traps using speakers that played children's cries, in yet another location, Hamas used an old man as a suicide bomber. How do you fight in such an environment? Israel is choosing a cautious approach using air power and tanks, which limits the risk to their own soldiers - and successfully so, given the low death toll on their side we've seen. I totally get that they are prioritizing that over protecting civilians that have been taught from the crib to kill all Jews. Should they instead choose a riskier approach that might endanger their own people? I think every nation would prioritize their soldiers over civilians from the opposing side. It's still awful, there's no way around it, but seriously, what choice do they have? It's just terrible options and those in charge in Israel have to pick the least terrible one.

in favor of Fatah who at least seem willing to work toward a peaceful resolution

Fatah has a "martyr's fund" worth hundreds of millions that they use to pay out to the families of those who die in the fight against Israel, including members of Hamas. They paid millions to the families of terrorists who died during the October 7 attack.

https://en.wikipedia.org/wiki/Palestinian_Authority_Martyrs_Fund

Abbas literally has a PhD in Holocaust denial. Fatah are really no good options either and on top of that, they have zero credibility among Palestinians due to how ineffective and corrupt their government is.

and through selectively looking the other way when money and weapons are funneled through back-channels to the group

They also did it, because they thought they could pacify the group, make them interested in governing and enriching themselves instead of waging war. It seemed to have worked for a long time, as evidenced by billions siphoned off into in off-shore accounts, but hindsight is 20/20. The thing is though, there was significant international pressure against Israel to allow these funds into Gaza, including from foreign governments and humanitarian groups, many of which are now using the fact that the Israeli government permitted the transfer of these funds against it or are even frequently distorting it into "Israel funded Hamas" or "Israel created Hamas".

Like I said, there are only terrible options. This seemed like the least terrible one at the time and since there are no magic wands, there are rarely ideal solutions.