"I have mixed feelings about this. Will the site be a memorial? Is this capitulation to evil?"
Actually, I think it's the proper thing to do.
In Sandy Hook (a very short distance from me), they tore down the old school and built a new one in its place.
The town of Newtown also acquired the Lanza home, and demolished it. The land will remain vacant.
(Honestly, who would want to buy it and live there?)