Firstly, apologies to those who don't remember this incident or perhaps were not even born at the time.
I seem to remember the incident being discussed on the radio a few years ago. I'm sure I heard it mentioned that the SAS Commander at the scene had planned to send his soldiers into the embassy equipped with night-vision goggles and armed with semi-automatic handguns. The plan was for an assault in conditions of darkness and for the captors to be effectively 'picked off' by the SAS. However, the plan didn't proceed, apparently because the then UK Attorney General was concerned that the nature of the assault would be tantamount to state-sanctioned assassination of the captors.
The above is my understanding; being neither a soldier nor a lawyer I could be wrong. I could have misheard the radio broadcast. My own take on the assassination angle is that the SAS as soldiers would not have technically engaged the enemy under the Geneva convention and so any fatalities on the captors' side would have been regarded as homicides (justifiable or otherwise) rather than enemy combatant casualties.
Sorry if this sounds like gobbledegook. I'd welcome any learned opinions.