In a videotaped speech played at a rally in Beirut on Monday, Hezbollah leader Hassan Nasrallah said that whoever killed Mughniyeh (in a car bombing in Damascus) would be punished. He said Hezbollah would "set the time, method and place for the punishment."

"The Israelis are worried, as they should be, because our blood will not be spilled in vain," he was quoted as saying.

Hezbollah blames Israel for Mughniyeh's death, although Israel insists it had nothing to do with it. Some, including Mughniyeh's widow, suspect Syrian involvement.

Syria, which announced it had launched an investigation into the killing, has yet to release any findings. A report in the Jerusalem Post said Syria's silence "may be an indication that the investigation has revealed information that could be very embarrassing to Syria, such as the involvement of Syrian nationals in the assassination...or the involvement of agents from other Arab states."

Even before Nasrallah's speech, Israeli Defense Minister Ehud Barak said that Israel was in a "sensitive period" and could not be "lightheaded about the possibility of retaliation" from Hezbollah. But Barak said that the defense and intelligence establishments were "gearing up," and he advised Israelis "to keep their eyes open in the near future."

In an analysis in the Israeli daily Ha'aretz, Zvi Bar'el wrote that Nasrallah's speeches "have long been a source for warnings of terror attacks, and Monday's speech was no exception."

Nasrallah told Israelis that "the punishment - not revenge" for Mugniyeh's assassination "would surely come," Bar'el wrote -- "and coming from the mouth of the person responsible for ordering the anticipated attack, his warnings have additional credibility."

Ely Karmon of the International Policy Institute for Counter-Terrorism said that although Hezbollah is threatening revenge anywhere in the world, the organization faces regional limitations.

According to Karmon, there are three likely scenarios for Hezbollah vengeance: an attack along Israel's northern border, where Hezbollah has stockpiled thousands of Iranian-made missiles; an attack on Israeli or Jewish targets abroad; or the use of Palestinian proxies inside Israel.

Striking at Israel's northern border would provoke a serious Israeli response against Lebanon that both Hezbollah and its Iranian sponsor would like to avoid, said Karmon.

"Iran is not interested in conflagration," said Karmon. It is eager to pass through the most recent United Nations Security Council sanctions and the upcoming U.S. presidential elections quietly to buy more time to complete its pursuit of nuclear weapons, he said.

The same goes for an attack abroad. If there is an attack in Europe or South America, every government would point to Hezbollah as the culprit because of its declarations, which could prompt more countries to declare Hezbollah a terrorist organization, he said.

That leaves the option of attacking inside Israel through Palestinian proxies, said Karmon.

Islamic Jihad, Hamas and cells in the Al Aksa Martyrs Brigades (linked to Palestinian Authority Chairman Mahmoud Abbas' Fatah faction) have ties to Hezbollah, he said.

Hezbollah may have fired the opening salvo, he said, with the terrorist shooting attack on the Mercaz HaRav Jewish religious school in Jerusalem earlier this month in which eight Israelis were killed.

At the mourning tent in Jerusalem, there were Hezbollah (as well as Hamas) flags, and investigators may turn up information connecting the shooter, who was a resident of Jerusalem, to Hezbollah, Karmon noted.