The reason they are there doesn't make them any less there or their presence any less illegal.
That all settlements are illegal is an opinion, not a fact. Legal scholars have argued for both sides and as of yet there hasn't been any opportunity for the question to be decided in any kind of official capacity. I believe that some, if not most, are clearly illegal. Realistically though, not all settlements are the same and I think you'd be hard pressed to argue the illegality of ALL of them. But this is irrelevant because...
even if they are all illegal the crime is one of Israel's government and not the individual settlers. Settlers who move there in accordance with Israel's laws are not acting criminally. Israel may be acting criminally by encouraging them to move there but law-abiding settlers themselves are not deserving of punishment.
The idea that the people who stole the land need to be protected from the people they stole it from at the expense of those people, is insane.
Even if you believe the entire west bank to be "Palestinian land" and all settlements as having been built on stolen land, the land was not stolen by settlers, but by Israel. The vast majority of settlers are innocent civilians moving to existing communities in accordance with their state's laws. Very few are "hilltop settlers" who actually go out and steal Palestinian owned land for themselves. But even the criminals that are doing this deserve protection from terrorism.
If they want to have the protection and security of living in Israel, perhaps they should live IN Israel.
So basically, you think that only some people are entitled to protection from war crimes?
Frankly, if someone stole my house and then got angry if I stood outside it on a daily basis and confronted them, that would be a bed of their own making.
OK. But that's not what is happening. Israelis are being randomly murdered for driving on west bank roads, not for stealing your house. And they are not being "confronted" but rather shot.
Now, whether you disagree with settlements or think they are illegal or even if you consider the average non-ideological, immigrant settler a criminal, they are all still civilians and the organized killing of them is a crime against humanity. Your basic argument is that it is "insane" to grant protection from crimes against humanity and war crimes to Israeli settlers. Or to put it differently, crimes against humanity are acceptable under certain circumstances. Nice.
Let's flip the script. After 1949 Jordan encouraged Palestinians to move into areas previously owned by Jews, such as the Jewish Quarter of Jerusalem. Is it equally insane to expect that these Palestinian "settlers" be protected from Jews who would now like to shoot them or should they be entitled to protection from war crimes like innocent civilians everywhere else in the world?