The title of this question and the text of the question seem to me to be very different, and all of this would have been a comment until it got too long.
I'll address the 'premises' of the question first. I don't really see how these assumptions connect to the question, other than the first (which has been strangely numbered '0'), but here it is:
0) The 'sanctity' of life (by which I assume you mean the value of preserving it) is not the highest priority in Judaism, though it is fairly high up on the scale. It's hard to really prioritize values in Judaism because sometimes they are given different expression in different cases. (For example, the punishment for violating Shabbos is death by stoning, the most serious forms of capital punishment, but one may violate Shabbos to save a life. On the other hand, it's better to be killed than to violate incest with one's sister, despite the fact that there's no capital punishment for someone who does such a thing. So which is worse, violating Shabbos or incest?) The point is that there are other values or commandments which are more important than preserving life (see Sanhedrin 74a) and one of those values is the preservation of Jewish identity (see Radvaz Teshuvah 4:92).
1) Jerusalem is 'holy' in a legal sense: one cannot bring sacrifices outside of the temple in Jerusalem and cannot eat certain sacrificial meats outside of the city (see Shevuos 14-15, among other places) and besides for the legal aspect of it, Jerusalem was/is holy because it is the site of the Shekhina - some manifestation or feeling of God's presence (Rambam Beis Habechirah 6:16). The reason for Jerusalem's holiness is not because there once was a Temple there in the past, but because that's the place for a Temple - past, present (in theory), and future. (Megillah 9b, Rambam Beis Habechirah 1:1)
2) The reason for praying towards Jerusalem is either because it is the place of the Shekhina (see above, and as context may imply in Kings I 8:48), or because all of the Jews praying towards one place indicates a unity of purpose/unity of God (see Sifrei VaEschanan 29), or because Jerusalem is somehow the place 'from whence prayers ascend to Heaven', whatever that may mean (Pikrei Derebi Eliezer 35). However, the reason is not because of any artifact, nor is it to 'remember the exile'; this rule was in place well before the exile (see Kings I 8:48 and its interpretation in Berachos 30a). But you are correct that idolatry is prohibited.
Now, the question is, considering that the value of maintaining human life is so great, how could it be that one is allowed to risk one's life (or that of others') for the sake of Jerusalem?
I believe that the answer is that Jerusalem isn't being treated differently than any other part of the Land of Israel, for which one is obligated to give up one's life (see Minchas Chinuch 425, 604). This must be the case, since there is a requirement to conquer the land of Israel, and this could have only be accomplished through soldiers risking their lives- that's how wars work. See also this short piece by R. Elazar Melamed one the subject of risking life for any piece of land. Of course, not everyone agrees, but you're asking about a particular opinion among many.