I was particularly intrigued by the Christmas tree ornaments and nativity scenes, and bought several in Bethlehem - where else? They are light-weight and make delightful one-of-a-kind gifts for family and friends back home.
It's been a few years since my trip, so I recently checked with AQIS to confirm that it's still OK for us to bring back olive wood items. Here is an excerpt from the emailed reply I received from Angela Reddy in the Timber and Timber Products Division:
"Non commercial consignments of manufactured wooden articles do not require an import permit or a quarantine entry. They must however be presented to AQIS on arrival in Australia for inspection to ensure they are free from live insects, bark or other quarantine risk material. "
So you can feel free to buy any olive wood items that take your fancy, safe in the knowledge that, as long as you present them for inspection on your arrival back here, you won't become one of the dubious 'stars' on Border Security!