Yes - it was ruled to be discriminatory. Basically, people passing through it were being put through an extra level of security (shoe removal etc), and this was illegal, as it was profiling specifially for the LY flights (this was not security done by ELAL, but rather by LHR, and had never been done for any other airline/destination before)
There were a lot of complaints brought against the airport because of this, and it was finally abolished.
The only downside of not having it, of course, is having to queue up with the rest of the people passing through T1 (unless you're fast tracked through it )

Oh, and LY security were very against it as well, as it 'split out' the LY pax, meaning that they were clearly able to be identified, and then targeted (from a security point of view) - they were pressing for ages to get it changed to the current system