This isn't really my area of expertise, but I think George Packer has it right:
The flotilla was bait, and Israel took it—a classic triumph of civil disobedience over state power.
Even if not illegal, and it probably wasn't, Israel's response was incredibly stupid.
Somewhat surprisingly, I haven't yet read anybody say that this could end up being a good thing for the Mideast peace process because it's bad for Israel. If Packer's analogy is right -- he also references the K-9 units used in Birmingham -- this could provide a wedge in the Palestine stalemate, perhaps eventually leading to greater concessions from Israel and a peace agreement. Drezner seems to almost get to this point when he says that Israel shares some things in common with North Korea:
[B]oth countries are diplomatically isolated except for their ties to a great power benefactor. Both countries are pursuing autarkic policies that immiserate millions of people. The majority of the population in both countries seem blithely unaware of what the rest of the world thinks. Both countries face hostile regional environments. Both countries keep getting referred to the United Nations. And, in the past month, the great power benefactor is finding it more and more difficult to defend their behavior to the rest of the world.
If the "great power benefactor" decides to reduce its support for the regime, it may have little choice but to accept some sort of bargain that it would have rejected previously. I'm not saying it's going to happen, but the odds of that have gone up, not down. Avoidable tragedy that the flotilla attack is, it could possibly end up serving a greater purpose.
(Just so we're clear, I'm not suggesting moral equivalence between Israel and American segregationists, or Israel and North Korea, or anything else. I'm thinking in purely strategic terms here.)