President Bush was right when he said Israel's use of an F-16 and a 2,000-pound guided bomb to kill a top terrorist commander in a crowded Gaza neighborhood was "heavy-handed," conceded an Israeli official here, but it was worth it to remove a man responsible for the deaths of many hundreds of innocent Israelis.

Few quarrel with the worthiness of the target, Hamas military commander Salah Shehadeh - but many question the method. The terror mastermind was killed along with his wife and three children and about a dozen others, mostly children.

The international outrage over the deaths of innocent civilians in Gaza - for which Israel expressed regret - ignores Shehadeh's role in sending suicide bombers throughout Israel where they slaughtered - with pride, not remorse - hundreds of innocent Israelis.

When the Arabs ran to the UN with their usual anti-Israel resolution, they were shocked by the American announcement that henceforth it will oppose all one-sided resolutions that fail to explicitly condemn Palestinian terrorism and urge both parties to pursue a political settlement.

"Unreasonable," declared an outraged Palestinian delegate.

The Shehadeh assassination revealed many of Israel's strengths and vulnerabilities in Washington.

The Shehadeh assassination revealed many of Israel's strengths and vulnerabilities in Washington.

The new American attitude on UN resolutions may be the most important. It's a rare diplomatic victory for the UN's favorite punching bag.

It was also a chance for the Bush Administration to emphasize that it considers such resolutions counterproductive.

The slow crawl back to peace negotiations was virtually uninterrupted and possibly even accelerated. The PA signaled a readiness to resume talks, Israeli officials said. And Palestinian groups, including the Fatah Tanzim and possibly Hamas, reportedly are still considering a unilateral cease fire.

Not all the fallout was positive for Israel.

Secretary of State Colin Powell, in response to accusations that Israel had violated agreements to use its American weapons solely for defense, said he is "constantly reviewing" Israeli practices. But he rejected charges of outright Israeli violations.

However, this incident strengthens the position of those in Washington who want to slow down arms or limit sales to Israel, especially top-of-the-line technology.

The administration last week also leaked stories that it opposes Israeli attempts to sell the Arrow anti-ballistic missile to India. Arrow is a joint US-Israeli project, and any Israeli sale of weapons or systems with American components requires Washington's approval.

Israel sells a wide range of weapons worldwide, many with vital American elements, and that gives Washington considerable leverage.

Powell also announced plans to meet in Washington next week with a senior Palestinian delegation to discuss reforming the PA security services. It will be the first high level meeting since Bush's June 24 speech calling for a change of Palestinian leadership. Powell could have sent a subordinate to the region to hold security talks but chose instead to host them here in what may be a subtle rebuke to Sharon.

But even while inviting the Palestinian delegation to Foggy Bottom, Powell let them know this won't be a meeting to air grievances but to talk seriously about implementing strong security measures, and they should come with "the authority to execute whatever decisions we arrive at."

Some officials here feel Sharon has been pushing the envelope in relations with the United States. With the pundits saying Bush has essentially adopted Sharon's policy regarding Arafat and has sanctioned his military offensive in the West Bank, the PM feels he can pretty much do as he pleases.

Bush's rebuke last week was very mild, his new UN policy was a very positive development and the Congress just approved an additional $200 million for Israel to fight terrorism.

Washington quietly pressed the Sharon government to release $15 million in frozen tax collections due the Palestinian Authority, about 10 percent of the total withheld. A reluctant Sharon faced criticism from his political right that he was helping finance the Intifada, but he had little choice.

He also agreed to nearly double - from 7,000 to about 12,000 - the number of work permits for Palestinians entering Israel daily, and take a number of other measures to improve living conditions for Palestinians.

Sharon has put Foreign Minister Shimon Peres, who is in Washington this week, in charge of economic and humanitarian assistance to the Palestinians. But Sharon is firmly in charge of issues of war and peace, and he says it's too early for political talks.

Bush is inclined to give him some slack, demanding that Arafat show more results on financial, political and, especially, security reforms.

Crunch time will come if and when Bush is convinced that the PA has made sufficient progress for political talks to resume. That could be the first real test for the Bush-Sharon relationship.

The war against terror has helped bond Bush and Sharon.

Israel's worst enemies are two-thirds of Bush's axis of evil, Iran and Iraq. Bush and Sharon understand collateral damage. The U.S. is facing cover-up charges in connection with a misguided bomb that killed some 50 Afghans at a wedding celebration. Israel can at least argue that it got its man.

Shehadeh was Number One on Sharon's most wanted list and targeting him is no less justified than Bush's vow to get Osama Bin Laden "dead or alive."

One purpose of the Israeli attack was to let all terror leaders know that none is beyond reach. America is trying to deliver a similar message globally, with less success.

American diplomats report there has been a lessening of terror attacks, due in large part to the Israeli military campaign but also because the PA was beginning to crack down on the extremists and other Arabs were exerting growing pressure on Arafat to adopt meaningful reforms.

Palestinians charge the Shehadeh hit was intended to derail political progress, not eliminate terrorists. But the Palestinians have long resisted calls for a cease-fire by insisting violence is not incompatible with political talks.

If the mild reaction from Washington encourages Sharon to take bolder actions - deporting the families of terrorists to Gaza, extending occupation of Palestinian cities, exiling PA leaders and possibly even Arafat - relations with Bush could turn south, and that doesn't mean an invitation to the Ranch in Texas.