Egypt massed troops and carried out arrests on Friday to quell Islamist militants in Sinai as President Mohamed Morsi visited an outpost where militants killed 16 soldiers, prompting the unprecedented crackdown.
Egypt also temporarily reopened the Rafah border crossing into the Gaza Strip, which was closed after Sunday's ambush on the border guard outpost, to allow stranded Palestinians back into Gaza.
The government and the military appeared determined to restore their grip on the lawless peninsula, but residents say their claims to have already killed 20 militants and captured six "terrorists" were mere propaganda.
State news agency MENA said six "terrorist elements" were arrested during patrols in the North Sinai province and a security source branded them as Islamist hardliners suspected of belong to a jihadist group.
But residents of the town of Sheikh Zuayyed said nine people, including two elderly men, were arrested in the morning from their homes, with all insisting the men were devout Muslims without links to Islamist extremists.
One woman told AFP that her husband, Eid Saeed Salama, 72, was feeding his goats when he was taken away.
And a neighbour said government forces stormed her impoverished house and seized her 68-year-old husband Selmi Salama Sweilam who was sleeping, dragging him away "naked".
"Armed men came in. One of them hit me and I fell to the ground," she said, adding that the government forces also made off with 45,000 pounds (around $7,450, 6,000 euros).
An AFP reporter said cupboards and closets had been ransacked and their contents strewn on the floor.
Several of those arrested had been imprisoned without charge under ousted leader Hosni Mubarak after a spate of bombings against tourist resorts in Sinai between 2004 and 2006.
Their relatives said they were easy scapegoats for security forces under pressure to capture the men behind Sunday's attack on the border guard outpost.
A security official said that authorities will press on with the operation "until we rid the Sinai of terrorism and criminals," MENA reported.
The agency also reported that authorities had released a Canadian student and two Japanese men who had been arrested in the Sinai after determining they entered the country legally.
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The army moved in large tanks carried aboard trucks to the border with Gaza and Israel and helicopters patrolled the sky as Morsi, accompanied by his defence and interior ministers, broke his Ramadan fast at the site of Sunday's ambush.
The president drove to the border guard station in a convoy of several dozen vehicles, followed by curious Bedouin teenagers on motorcycles.
Bedouins living in shacks around the outpost had not been informed of the president's visit. "Is there another attack?" one of them asked as cars carrying the president's machine gun toting guards drove by.
The buildup comes after state television reported that military helicopters and soldiers killed 20 militants on Wednesday in the first such operation in the Sinai in decades, in retaliation for the raid.
Israel said it gave Egypt the go-ahead to deploy helicopters in Sinai, easing the restrictions on military presence in the peninsula under a 1979 peace treaty between the neighbours.
A resident of Tumah, where military helicopters were reported to have killed the militants, also said there was no bloodshed.
"We saw nothing. There were 45 armoured personnel carriers and police vehicles and two helicopters. They fired two rockets but they didn't hit anything," said Abu Mohammed.
Several kilometres up the road from Tumah, residents pointed to a hole a brick wall of a small building used to store wood, which they said was caused by a gunship missile on Wednesday morning.
Another just missed a house, they said, showing off the missile's shrapnel. No one was killed in the strikes, they added.
Tribal leaders who met the interior minister on Thursday said they demanded to see proof that militants were killed in Wednesday's strikes.
They told reporters they had also agreed to help security forces close down smuggling tunnels to the Gaza Strip used for contraband and weapons.
Israel imposed a blockade on the enclave after Hamas seized it in 2007.
And on Friday, despite its policy to stop the flow of illegal immigration, Israel allowed a group of migrants to enter from the Sinai.
"In consideration of the unusual circumstances and humanitarian situation, an exception was made, and the foreigners were transferred to the Israeli side of the fence," the Israeli military said in a statement.