There are three probable possibilities now: 1) after another week of fighting Israel occupies a sliver of South Lebanon, but a ceasefire is negotiated and eventually a peacekeeping force replaces the Israeli army, and Hizbullah agrees to no longer fire rockets at northern Israel (unlikely); 2) Hizbullah's fierce resistance in the South (as seen recently) means Israel is not able to sustain the occupation of even a sliver of the South, but a fragile ceasefire is negotiated anyway (more probable); 3) Israel refuses to stop the war after it has been unable to carry out its objectives in three weeks and thus continues it (what a lot of Israeli editorialists worrying about the army's performance so far think it should do.)
The irony of outcome number 2, the one I think looks like the likeliest for now if pressure is brought to bear on Israel over the next week, is that while it will be a failure for stated Israeli and US goals it has the potential of forcing Israel into peace negotiations with various parties and finally solve the whole crisis. Yes, it would be seen as many in Israel as a failure, but maybe that is what is needed to push them to the negotiating table. It's unlikely, I know, and will have been very costly (especially for Lebanon), but I think it might be a small ray of hope out of this mess. And while Israel's pride may be damaged, it would still emerge mostly unscathed (in terms of human and other damage) and with its role in the region finally normalized and secured.
The other side of outcome number 2 would be that it is merely viewed as an Israeli defeat rather than an opportunity, and that it makes everyone just more bellicose. Then, the fragile ceasefire is sure to be broken sooner or later and lead to an even greater war. Which is why we need the regional superpower to act boldly and fairly, and then it will really be able to claim that we were seeing the pangs of birth of a new Middle East -- one chosen by the region's players rather than imposed from outside.