Most of the IDF activity is taking place around Jabaliyah (Map: Perry Castaneda, click to enlarge)
What we are seeing so far is eerily reminiscent of the beginnings of the war between Israel and Hizbullah in the summer of 2006. So far, Hamas has demonstrated that its rocket attacks can reach at least as far as Ashqelon, and that it is capable of firing hundreds of missiles a day, if it so desires. IDF activity, so far taking place at the brigade level (Givati) and consisting of infantry forays together with armored units, engineers, and air force, has made no dent whatsoever in the qassam firing while killing many civilians, including children - though it has also managed to engage Hamas fighters. The army has even made statements to the effect that its activity in Gaza is not directly related to the rocket launchings; the claim seems to be that it is pursuing larger tactical or strategic aims.
The army appears to be testing the waters before embarking on a larger ground offensive. Barak may very well be unable to resist the calls (indeed it serves him in his own political aims against Olmert) for the "real thing" - the much-anticipated ground operation - if qassams hit a strategic installation in Ashqelon, end up killing a family, or strike a target similar to the train depot in Haifa during the Lebanon war.בכירים אומרים בנוסף כי ההחלטה להמשיך בפעילות היא ללא כל קשר למספר הקסאמים שנורים מהרצועה לעבר ישראל, וכי הצבא ממליץ על שורה של צעדים כנגד החמאס ולא להסתפק בתגובות נקודתיות בהתאם לשיגור הרקטות
Senior figures added that the decision to continue the activity is without any connection to the number of qassams that are fired from the Strip at Israel, and that the army recommends a series of steps against Hamas and not to make do with pin-point responses to rocket launchings (Ha'aretz).
What we have not seen so far are significant casualties of IDF soldiers. This suggests that the forays are still being conducted fairly cautiously, even though the military has apparently entered heavily defended areas.
UPDATE: As I write this, there is a report of 5 "seriously injured" soldiers.
Right now, it appears that Hamas is trying hard to force Israel into a truce that would see an end to the threats of assassinating the remaining political leadership. Israel, in the meantime, hopes to achieve some kind of near-knockout blow that would make it look as if it had won this round of the conflict. Destroying a few Hamas outposts will not do for this aim. If there is no large-scale ground offensive, we may see an attempt to assassinate a key Hamas figure before this fighting ends.
One thing that Israelis and Americans must get into their heads is that neither this activity, nor the assassinations, nor a large-scale ground operation will by themselves bring about regime change. The goal of regime change will continue to elude the allies. That is not to say that there isn't a great of dissatisfaction with the Hamas government in Gaza. But a revolution from below is a very unlikely prospect, especially while Gaza is under attack.