Unfortunately, the alternate option was not “let them stay hostage a while longer”. It was “let the hostages die”. And maybe that would have been the more ethical call. But let’s not delude ourselves that they could have been kept alive any other way.
They will select a new primary leader, but they are organized more as a confederation than a centrally controlled group. Very little of their action relies on there being a leader at all. Past Israeli assassinations of their leaders haven’t weakened the group, and I don’t see any reason this time would be different.