"How is daylight saving time set in Israel?"
A good ref on how DST is followed in Israel is on the webexhibits page at http://webexhibits.org/daylightsaving/g.html#i. Note that this is the same website that the US Dept of Engergy (the agency responsible for the Energy Act that changes DST, among other things) includes a link for more info on DST.
Other than using UTC/GMT in an enterprise (particularly for servers), our recommendations are included in http://support.microsoft.com/kb/303921.
For Brazil, another country which has variations in recognizing DST, see http://support.microsoft.com/?id=317211.
And see this reference on the MS Exchange Team blog: http://msexchangeteam.com/archive/2006/10/17/429210.aspx.