the decision for this fight against the PA as well as with the other terror groups, is based on comprehensive intelligence reports that flowing from the field about the cooperation of the PA with these terror groups, as well as conducting terror activities of their own.
You talk about Sharon and his lust for war or conquest, but let me remind you that there are people that sit together with Sharon in the government that you would'nt suspect them for wanting to conquer the terretories like Shimon Peres, who support the current military operations as well.
Bush administration wants to replace Arafat, do you think that The US is so biased towards israel that they would, for no specific reason, support this kind of extreme opnion? which contradicts, btw, it's interest for immediate calm in the ME.
To understand this, you must put yourself in their position:
What if, hypotethicaly, you are now the PM of Israel and you are getting reports about Arafat and the PA involvement of Terror activities, building a packt with Iran and Iraq (who wants the destruction of Israel), conducting arms deals, building bombs etc. what would you do? would you still consider Arafat moderate?