Interesting thread here - I am an Australian so I can you give my viewpoint on the matter.
One thing to keep in mind: voting itself is not actually mandatory. Showing up to the polling booth and getting your name ticked off IS. So, one could conceivably show up and then write 'all politicians are crap' on their ballot and no one would be any the wiser.
This may seem like a strange system, but I think the idea is that, by making voting mandatory, they will get more people to think about their vote, instead of just having the passionate ideologues turn up to vote. Not everyone is going to be informed, but I would hope that if one has to vote, one would at least have a look at the issues and make a decision on that. While it does have the disadvantage that some uninformed people end up voting, this is really no different to anywhere else - just that the numbers may end up being magnified
I'm not sure that the principle of it is undemocratic, per se, in fact it's sort of paradoxical - force people to vote so that the true will of the people is seen! Having said that, because there are a great many people who wish to see Australia become a republic before long, this system may well change.