The areas close to the Israeli border witnessed "a cautious calm" early Thursday after Israeli aircraft retaliated to the killing with heavy bombardment.
"We did not sleep all night. Israeli helicopters were hovering over our heads the whole night and the shelling was so intense," Mohammed Shabaan from the village of Kfar Chouba told Deutsche Presse-Agentur dpa.
The streets in the village were half deserted except for some villagers who ventured out to check on their fields at the edge of the village.
"I will not go inside my fields today as they (Israelis) might think I am a Hezbollah guerrilla and shoot at me," fellow villager Ali Hussein said.
The Israeli post which was targeted by Hezbollah fire on Wednesday overlooks Kfar Chouba.
"For us the war here is not over. We can expect anything to happen daily," said Ali.
The Israeli shelling mainly targeted the edge of the village, and shrapnel could clearly be seen in the streets of village.
"Luckily no one was hurt by the Israeli shelling but shrapnel was falling on our heads. Despite that, the shelling targeted the outskirts of the village," said Hussein as he held up one of the pieces of shrapnel that had landed in his garden.
On the Israeli side, the post in Shebaa which was directly hit by Hezbollah fire looked deserted. In areas closer to the border, Israeli soldiers were seen clearly on alert but inside their posts and not in military vehicles.
The violence was sparked Wednesday when Hezbollah guerrillas said they spotted Israeli soldiers crossing the U.N.-drawn Blue Line that demarcates the border with Lebanon.
According to Hezbollah a clash took place between the two sides, and Hebzollah fired 20 Katyusha rockets and mortars on the Shebaa post.
The Hezbollah press office denied Israeli reports that any of its guerrillas were killed or wounded in the attack.
Lebanese police said Israeli artillery fired more than 70 rounds on hills around the towns of Kfar Chouba and Shebaa, but there were no immediate reports of casualties from that attack.
Meanwhile, southern Lebanon Hezbollah spokesman Sheikh Nabil Kawook said, "Israel sparked the violence by crossing the Blue Line." <!--page-->
Hezbollah will continue to protect the Lebanese people and territories from the "Israeli infiltrators", he said.
In the meantime, leaflets were scattered by Israeli jets over the capital and the southern port cities of Sidon and Tyre with the message that Hezbollah will return violence to Lebanon.
The leaflets, which were written in Arabic and signed by the "government of Israel", called on the Lebanese and the Lebanese government not to allow Hezbollah to continue their attacks.
"Hezbollah has returned to serving foreign interests by carrying out terrorist actions inside the Israeli territories to provoke a retaliation from our side.
"These irresponsible acts may lead to destruction ... and return Lebanon to the years of fear.
"We call on the Lebanese and the Lebanese government not to allow Hezbollah to play with the future of Lebanon and push the situation to escalation after the Lebanese have chosen stability and prosperity," the leaflets read.
The leaflets also held the Lebanese government responsible for the attack.
The Hezbollah attack sparked U.S. condemnation. "In our view Israel has a right to defend itself," spokesman Sean McCormack said.
The Hezbollah attack comes as Israeli forces have been reinforcing fortifications along the frontier between the Shebaa Farms region and Lebanon, including the installation of new barbed-wire barriers and surveillance cameras.
The last attack in the area was on May 21, when Hezbollah militants fired on troops in response to Israeli fire that damaged five houses.
The small mountainous Shebaa Farms area lies at the convergence of the Israeli, Lebanese and Syrian borders. It was captured from Syria in the 1967 Arab-Israeli war and is now claimed by Lebanon with Damascus's approval.