I think Avnery's criticism of the first letter leans too much on the issue of the writers' perceived racism. Racism is likely a major factor here; however, I think it is easier to debunk their claims by simply bringing up the fact that Gaza settlers are being resettled into reasonably comfortable residences and compensated financially for whatever losses they may incur. And while the definition of what constitutes a crime may vary from person to person, I don't think those who compare the plight of the Gaza settlers to that of the people resettled by Stalin into the deadly Siberian cold with no adequate means for survival have much of a point. Furthermore, those settlers live in an area that was never officially listed as part of their country of citizenship, hence their right to reside there indefinitely can not be guaranteed.
Some of what Avnery says about the second letter is quite poignant.
The second manifesto declares that the Halakha (Jewish religious law) commands the killing of innocent Palestinian civilians if this helps to save Jews. It is signed by the heads of the "Arrangement Yeshivot," the West Bank settlement rabbis and other religious leaders. They were later joined by one of the two chief rabbis (the Sephardic one).
The second manifesto is far more dangerous. A religious doctrine that calls for the killing of civilians in the name of God is very serious. Such a decree signed by the rabbis of the "Arrangement Yeshivot" is tenfold worse.
In order to understand this, one has to know that these Yeshivot are in fact military units. They constitute a unique phenomenon in the Israeli army: whole units formed on an ideological-political basis, obeying their own leaders.
The present setup was created, officially, in order to enable students of Yeshivot (Jewish religious seminaries) to serve in the army without interrupting their studies. In practice, they constitute a militia of the extreme-right wing, especially the settlers. While serving in the army, the Yeshiva students are nominally under the army chain of command, but in practice they are also subject to their rabbis, whose position is reminiscent of the political commissars of the Red Army.
The stories I've heard from many veterans of the IDF is that the force is largely secular. However, the fact that there are such "ideological-political" units in the IDF is a serious concern, and it is also a serious concern that the "Rabbis' Letter" may be taken up by some in those units as a "Rules of Engagement" manual.
May God protect us from those who would speak in His name.