I think long-term sanctions would be useless. Aggressive, short-term interdiction of aerial resupply for Qadhafi regime forces would probably be quite productive, though.

I think any active armed intervention should wait for either an invitation from a Free Libyan provisional government that may coalesce in Benghazi, or if Qadhafi forces turn the tide and are threatening to overrun Benghazi and other major opposition-held population centers. The retaliation that could result from such a scenario might look like southern Iraq post-Gulf War I.