What if Israel fails to win the battle against Hezbollah? 

Many are asking such a question, especially in the shadow of the results of the early ground battles, which Israeli military commentators consider as humiliating for the Israeli army.
Early indicators show that the massive destructive war targeting the Lebanese infrastructure and civilian areas left Hezbollah intact and capable of leading efficient fight against ground forces as well as capable of showering the entire northern Israel with Katusha rockets. Not only that, but most Israelis take the warnings of Hezbollah leader to move strikes beyond the city of Haifa very seriously.
It also showed that Hezbollah posses the military tools that can provide answers to most of Israeli combat military equipments except of high altitudes air strikes. It is also clearly noted that Hezbollah’s combat force, especially in the southern parts of Lebanon are highly trained and more motivated than soldiers from the most elite units in the Israeli army.
While the American administration intervention managed to put all diplomatic initiatives and interventions in stall until the military situation in southern Lebanon changes to the benefit of Israel, there exist no signs that this is happening or will take place in a reasonable period of time.
Before this latest development on Israel northern borders, strategists in Israel believed that Israel’s destructive ability is enough to prevent Hezbollah from using its arsenal of long range rockets against its soft belly. In fact the minute Israel launched its major offence and destroyed the Lebanese infrastructure and attacked almost all residential areas that are considered as the strongholds of Hezbollah, Israel lost this deterrence factor and is left with one option only, to launch a major ground assault.
Strategically, the situation in Lebanon is unique, but not impossible to copy. A model where a weak central authority exists, but a strong guerilla group leads the confrontations with the enemy, is in theory possible to copy elsewhere as long as most of the official regimes in countries that has border with Israel are losing popular ground and appearing impotent in handling both national security issues as well as internal development.
This model, with minor difference exists right now in both Lebanon and the Palestinian territories. Yet, as this war drags on, it could create a level of instability in the region, which could develop into a similar situation in other Arab countries.
The most significant strategic lesson learned from the current war in Lebanon so far is the practical prove that it is possible to fight Israel without the need for large, well equipped armies or high tech weapons and without the need for a strong international ally.
While all Arab countries will work hard to prevent the emergence of such a situation, this model that can provide a completely different balance of power in the region, is becoming more and more attractive to Arab masses, who are deeply injured by the level of impotence their governments represent.
In reality, what the U.S. government sees as a necessary battle to develop a new Middle East stands good chances to take place, not necessarily to the liking of the United Sates.
What the U.S. officials describes as creative chaos is also a demand of movements that believe in the need to radically change the imposed realities in the area.