Dukat was getting too likeable in those days. His fans were touting him as a hero because only so many million Bajorans had died during the Occupation. The writers saw it as disturbingly similar to Nazi appologists. The Kira/Dukat shipping certainly didn't go over well with them either, what with their view that Dukat was basically Hitler to Kira. Dukat's ranting hatred of Bajorans in "Waltz" was done specifically to put an end to the Dukat appologists.I miss the "good" Dukat from series four's 'Return to Grace', 'Indiscretion', and 'The Way of the Warrior'. I know, I'm weird, but still..
My own personal view is that the writers should have left well-enough alone and never brought him back after "Sacrifice of Angels". His story had ended in true Shakespearean fashion, and every Dukat scene after "Waltz" was terrible character assassination. Weyoun, Damar, and the female Shapeshifter were more than filling the villain quota at that point.