The confusion, I believe, comes from the designation "al kiddush Hashem" (in
the sanctification of G-d's Name). There are two separate issues here. As you
point out this applies to "those who give up their lives in order not to
transgress a Torah law." The other issue is the great impact of being killed
specifically as a Jew, even if one did not intend to give up his life. This
can affect even those people who in their lifetimes would have been
such "transgressors" to the point of not even being worthy of normal mourning
practices (Shiva, etc.) If such individuals were "murdered in the Holocaust"
or are "victims of anti-Israeli terror and Israeli soldiers who died in
action" then the response is as follows.
Ramah (Rav Moshe Isserles) in Shulchan Aruch (code of Jewish law) YD. 340:5
quotes differing opinions. "There are opinions that a mumar (a consistent
sinner) who was murdered by idolaters is mourned after ... and there are
those that say not. [The second opinion] is definitive."
Shach (commentary of Rav Shabsai Cohen) in YD. 340: 9,10 disagrees with this
decision. Quoting from an earlier work of Ramah himself, Shach concludes
definitively from Talmud Sanhedrin 47A,B that being unjustly murdered,
executed, etc., is in itself (the death) an atonement for sins and changes
the status of the deceased to one of "righteous." This person is therefore
deserving of all the honors and respect of a righteous Jew.
Yitzchok D. Frankel
Long Beach, NY
February 6, 1997