Burn down a few neighborhoods in Ramallah as retribution. Heck, I wish they burn the whole city to the ground.
The only reason the Arabs in Israel are alive today is because the Jews have had too much restraint and guilt to fight back and attack them.
Even, I am in doubt that this so-called "Revenge" killing was even done by Jews. Not that I would feel bad if it was, but Jewish people as a whole don't really seem vigilant enough to do such a thing. It would make a great propaganda ploy by the Arabs, which is their greatest tool of warfare. The typical Jewish response usually is just to protest to the deaf ears of the Israeli government who will go and bomb empty buildings or release more terrorists for "PEACE", as others wrote here.