This sounds both interesting and very useful to OSM at Israel.

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The license is Creative Commons Attribution-ShareAlike 2.0. There is a plan to move to Open Database License.

Basically, I believe you must credit OpenStreetMap.org in your online/printed maps; And you must release any changes you make to the map data under the same license.
To avoid releasing your extra data under the osm license, you have a possibility keep your data apart from the osm data, and to generate maps from several distinct sources.

ok, several things:
a. If you want to be able to choose a specific language, you should be interested in the idea of having name:xx for each language, and not name=“hebrew - arabic - english”. That will make life much more easier.
b. Regarding OpenLayers: I’m no expert, but if you want anything that resembles what you see in OpenStreetMap.org, that seems the way to go.
c. I’ve seen somewhere a java application which works on osm data. It displays the data in 3d, like google earth. It also shows buildings and POI.