Yes, the Walt mystery is one of the biggest letdowns in this show for a lot of people. Perhaps they saw similar properties in Walt that they saw in the Smoke monster and wanted to study in hopes of gaining a greater understanding of this creature that has been terrifying them for so long. Maybe that's why Walt was so important to the others in season 2.
Whatever extent Walt's powers were, the fact that they never fully explored this storyline is more than a bit disappointing. Unless, of course, Walt is really the one true candidate who will make a last minute appearance and take over for Jacob.
Edit - btw, fLocke did confirm that he needs the dead bodies on the island to take their shape.