I'd say so.
Now, anyone who actually looks at the numbers recognizes that BDS was a failure already. It's not something to write off, Jews of all people know what happens when you ignore a boycott or try to play it down; however, it really hasn't devastated Israel's economy in a significant and measurable way and I'm under the impression that not even half of the "victories" the collective movement claims even make them look competent. I have friends in Israel who look like they had fun and I've noticed more than a few posts of people saying this is their new friend x from country y, and that they're having fun. I know they definitely advertised the sh*t out of Tel Aviv and Israel in general, having seen an English-language ad featuring Gal Gadot a few hours ago.
I wouldn't worry about Iceland, they seem like edgy f*ckbois who are edgy for the sake of being edgy. Even I know that Eurovision strives to be apolitical so they'll have their critics, and as you said they'll face some sort of punishment. One thing I do know about them is that they're stickler for rules, and have cited other nations for screwing around (and doing so against Israel too!). I wonder if those BDSM boys realize that the punishment isn't the kind they'd find fun...and now that I think about it, I wonder if they're too dumb to realize that BDS isn't BDSM. As you said, they didn't even come close to winning and I've been told that they really did that to leave an impression or gain a few more votes.
But from what I can tell, the show was amazing and everyone loved it. I'm American and pretty sure that I only know of Eurovision's existence because of Israel's obsession with it, but with that connection I do pay some attention and it really seems like it was a Eurovision to remember.