Firstly, we have only Israel's word that Hamas was using the school as a headquarters. In fact, Israel has made this claim every single time they have killed a civilian. I suppose sometimes it is even true.
However, it makes no difference. Water is right, it is justifying evil, and the only reason people are doing it is that they are unable to see Palestinians as human. In fact, if your child was lying there dead in the dirt like those dead children lined up in that picture, and some cop had put one in their head and justified by saying "but the drug dealer hid behind them", you'd want the cop put in jail. This is because you see your own child as human, but you don't see these children as human.
There are two problems with this:
1) it makes you empty inside, and something less than human yourself.
2) palestianians actually DO grieve the way that we do, and the lives of their children are as meaningful to them as yours are to you. in other words; they want vengenance. they'll get it. it probably won't be your ass, because most you with this kind of diseased outlook live in small towns that no one is ever going to bomb, though you often stay up nights worrying about it anyway. but it is only human to want to avenge your child's murder. and your big problem here is, even though you can't see it, these people are human. they will avenge.