That's a damned shame, as this review from ElectronicIntifada makes clear. The crux:
To say that Palestinians are absent in Waltz With Bashir, to say that it is a film that deals not with Palestinians but with Israelis who served in Lebanon, only barely begins to describe the violence that this film commits against Palestinians. There is nothing interesting or new in the depiction of Palestinians--they have no names, they don't speak, they are anonymous. But they are not simply faceless victims. Instead, the victims in the story that Waltz With Bashir tells are Israeli soldiers. Their anguish, their questioning, their confusion, their pain ... So while Palestinians are never fully human, Israelis are, and indeed are humanized through the course of the film. ...Update: I'm happy to say that I was wrong. Waltz With Bashir did not win the Oscar for best foreign-language film. How about that! Small bits of good news.
In the final analysis, this is what Waltz With Bashir is about: the evasion of responsibility.