Has the current government of Israel acted in defiance of G-D’s will (Halacha) by paying an EXORBITANT ransom to free one kidnapped person and 3 corpses? Does not G-D instruct us in Shulchan Aruch that EXORBITANT ransoms only encourage others to repeat the crime? What sort of sanctions can a Rabbinical court impose against such a government? Is there a Rabinnical court that is willing to do so?

Rabbinical courts in Israel are authorized by State law to deal only with issues of personal staus- divorce etc. The government of Israel does not, unfortunately, see itself bound by Halacha. You are correct in your assertion that it is forbidden to ransom prisoners at a price that exceeds what would be demanded of other nations. However, in a wartime situation the overrding halachic consideration in each case is what will assist Israel in winning the war.