It always was considered very problematic, but necessary evil kind of thing. It basically made sense, especially in the military context.
From what I got so far, even by asking other people who worked in the "defense sector" in Israel, is, though problematic as you said, the directive remains, regardless, very "curtailed" in term of use.
Though it relies on a number of hypothesis, it is mostly based on "what is the likeliness we (IDF) will manage to get our men and citizens back before anything happens to them".
Considering the experience Israel has with its citizens being taken hostages by terrorist organizations, how Islamic terror groups treat their hostages, and how Israeli hostages are especially prized "commodities" the approach is "better die now in a rather clean way, or as quick as possible, than ending up being the protagonist of some snuff movie on liveleak".
Had it existed back then, I wonder if it would have been used in Munich and Entebbe.
But, more to the core of my question: is it accepted equally as "dying in service" by service members?
Regarding civilians, I would assume they would expect for their lives to be spared by their own government, though they would be likely to be at the receiving end of barbarous treatments. Which Israel is, understandably from a Historical point of view, very, let's say, "touchy" about.
