Well when he specifically says to kill Americans and even their children "slowly and painfully" yeah, I'd say that's just a tad anti-American.
Yes, those lyrics were a terrible, terrible thing to say. I'm glad to see he's apologized since then. That said, we have to remember the context of the performance. If Psy had been burning flags and performing for a crowd of religious extremists or militant nationalists, I wouldn't be defending him. As it is, I can understand why he sang the song and I can see how I might have done something similar:
1) he was performing at a military protest. He smashed a tank.
2) He didn't write the lyrics, it was a cover song. This may sound like a trivial distinction, but covering a song can be fairly spontaneous. It's not nearly as premeditated or self-expressive as sitting down, writing the lyrics, rehearsing, recording, mixing, mastering, and publishing.
3) the catalyst for the songwriters (N.E.X.T.) and the focus of the song is U.S. torture practices, not racism, nationalism, or economic incentives (although those factors might have contributed to the lyrics).
4) this was during the BUSH ADMINISTRATION and all of that "enhanced interrogation" bullshit. Terrorism begets terrorism. Our popularity was at an all-time low. We were traipsing across the globe, starting wars over opium and WMD's we knew didn't exist so Cheney and Halliburton could rob taxpayers with no-bid contracts and cost-plus spending while we tortured untried suspects. I vacationed in Buenos Aires in 2003 and Canada in 2004 and virtually everyone I met demanded to know my stance on Bush as soon as they learned my nationality. I couldn't have a conversation without first assuring everyone of my decency as a human being. And that was in
Canada. Who knows that they thought of us farther afield.
5) U.S. troops had just run over two teenage girls and been acquitted with no input from South Korea's justice system.
The whole situation is akin to a punk rocker covering "Cop Killer" at a police brutality protest after some terrible abuse of authority. It was a dumb thing for Psy to do, but an understandable reaction given the circumstance. He was in his twenties, he overreacted, and he's thought better since then.