In exchange Hezbollah returned the bodies of Israeli soldiers Ehud Goldwasser and Eldad Regev who were captured on July 12, 2006, sparking a devastating 34-day war.
"This doesn't change anything in the equation of Hezbollah and Israel," said Timur Goksel, former spokesman for the United Nations peacekeeping force in Lebanon (UNIFIL). "It just closes one subject, but there are still other issues. I don't expect peace to break out."
Tens of thousands of people attended celebrations on Wednesday after the swap, including Hezbollah chief Hassan Nasrallah making a rare live appearance.
In Israel the picture was one of sadness.
"Israel came out of it looking like the humanitarian country, receiving bodies in mourning and playing the victim, while the other side looked like the aggressors, celebrating death," said Nadim Shehadi, a Lebanon expert at Chatham House in London.
"This image is far from reality where Lebanon was the victim of Israeli brutality in 2006 and Israel was the aggressor."
The 2006 war killed more than 1,200 Lebanese, mostly civilians, and more than 160 Israelis, mostly soldiers.
Israelis were particularly appalled by the welcome for Kantar, who had been serving five life terms for a 1979 triple murder viewed as one of the most brutal attacks in the country's history.
"The joy that was expressed in Lebanon was mostly psychological and wasn't about one man," Goksel said, however.
"They don't think very much about the content of the exchange, but the fact that Hezbollah was able to impose its own demands on the Israelis and get away with it. It made people say 'Hey -- we won something for a change'."
Kantar belonged to a secular Palestinian faction and was jailed four years before Hezbollah was even formed. He was the longest-serving Arab prisoner in Israel.
His release was "a major feat for Hezbollah... It is precisely that he is Druze and not a Hezbollah fighter that his release has added value aside from the symbolism of it all," said Amal Saad-Ghorayeb, author of "Hezbollah: Politics and Religion."
"The fact that Hezbollah fought so hard for a prisoner that was not one of their own, who belonged to a secular group... is healing the wounds of the May clashes" this year, she said.
Fierce sectarian fighting killed 65 people in May after the Hezbollah-led opposition, backed by Syria and Iran, took over large swathes of predominantly Sunni west Beirut.
The fighting led to an accord being signed in Qatar that saw the election of Michel Sleiman as president after a six-month vacuum and the later formation of a national unity government.
Sleiman joined usually divided political leaders including Prime Minister Fuad Siniora, parliament speaker Nabih Berri and the entire cabinet in presenting a united front to greet the returning prisoners at Beirut airport.
"The swap burnishes its (Hezbollah's) national credentials, especially since it was able to unify the Lebanese, even on a very cosmetic level," Saad-Ghorayeb said.
"Hezbollah was able to impose that unity... There was no Lebanese politician that could have possibly not greeted the prisoners. It was because it was Kantar that they all had to show up."
Hezbollah's arsenal, which it maintains is necessary to resist Israel, caused great controversy after the May clashes.
The swap "puts us one small step closer to an extended period in which there will be discussion of Hezbollah's arms," said Paul Salem, head of the Carnegie Middle East Centre.
"The discussion will be about the relationship between the armed resistance and the state and not about disarmament."
Nasrallah said on Wednesday that he was open to dialogue on all issues, including Hezbollah weaponry.
Saad-Ghorayeb sees this as evidence that Hezbollah "is at the peak of its power." "Now more than ever, Hezbollah feels vindicated regarding its arms, the use of force and the logic of force and resistance," she said.
"It will be very hard for the other side to persuade the Lebanese or at least the opposition that there is an alternative more effective than resistance in defending Lebanon."
