I actually don't disagree with anything you said at all, Goshin.
As far as the Hebrew goes, I would say that there is an ongoing debate between Hebrew scholars on the matter. It's not a simple "murder" vs. "killing" debate, as the meanings of these English words do not fully encapsulate the meaning of the Hebrew word (according to these scholars). The full meaning is indeed explained through the rest of the bible.
But here's where Catholics and protestants differ.
The main reason the Catholics prefer "kill" to "murder" is because the Bible itself dictates which types of actions are self-defense etc, and are thus justifiable killings and non-sins, not the laws of the land one is in. Murder, in English, simply means illegal killing, and is open to far more subjective interpretation than "killing" is.
This is, because as you point out, the Bible specifically states the exact conditions for justifiable killing that doesn't constitute a sin.
The Catholic church believes that using "murder" creates more ambiguity for things that superficially resemble the situations described in the bible, but are not explicitly stated.
Also, I don't think the OT is pacifistic. Quite the opposite in fact. However, I do think the NT is far more pacifistic than it is violent, but still allows for violence in certain situations.
However, using the context of the bible, Old and New, most killing is to be avoided at all costs. And even justifiable killing is to be avoided if at all possible. And revenge killing is never justified, for forgiveness is the ultimate virtue. Which is why the Catholic church opposes the death penalty. Only God can pass judgment and take revenge. We have been told to forgive and forgo revenge.
Essentially, the Catholics feel that only God can justify killing, not the legal system of a nation. God has left examples of what are justifiable killings, and Jesus expanded upon that in the New testament by spending quite a bit of time focusing on forgiveness.
That's there prerogative. According to strict adherence to Catholicism, the Iraqi war was a sinful war because it was not done for defense, and all efforts at peace had not been exhausted.
Thus if someone shoots through a "meat shield", as BD puts it, to get the "bad guy", they are in fact committing a sin, and full responsibility lays on them for the innocent death, even if they shot in self-defense, because their "sinful" ways put them in danger in the first place.
Many sects of Protestantism clearly have a less stringent view on the matter.
Which side is right?
Only God knows for sure, and that's the truth of it.