A correspondent has made an interesting point to me:

What is the reason for referring to "Israelis" rather than to "Israel"? Imagine the following headlines: "Britons Renew Efforts to Control Southern Iraq"; "Russians Pound Chechnya"; "Frenchmen Invade Ivory Coast"; etc.

I suspect it is one or both of two possible reasons. The first is that, in avoiding reference to Israel as such, it a small but symbolic gesture of solidarity with those who refuse to accept and recognise the legitimacy of the State of Israel. The second is that it does away with the distinction between a state and its citizens, thus making all Israelis as Individuals responsible (and, of course, in the eyes of the press, guilty).

Given that this practice is, as far as I know, only used for reports about Israel, there is a basis (inconsistency, and thus lack of fairness) for making an issue of this.

It's a good point. Have a look at random headlines and you'll see many, if not most, are indeed along the lines of this one, from AP:

Israelis renew air strikes in Lebanon

By HAMZA HENDAWI, Associated Press Writer