Why would it even occur to us to have compassion on a murderer?
Rashi and Ramban (both citing the Sifri): Because one might argue that if one person has been killed, why should we kill another one, leaving two dead? 1
Ramban: The Torah adds this to the Asei of "u'Vi'arta ha'Ra mi'Yisrael". Indeed the Torah adds a warning not to take pity on all sinners who are particularly dangerous - not out of fear and not out of compassion, nor based on any other motive - such as a Meisis - in Re'ei 13:9; a sorceress ? in Mishpatim Sh'mos, 22:17; a woman who grabs a man indecently in order to protect her husband - Ki Seitzei, 25:12, and Eidim Zom'min - in Pasuk 21. See Ramban. See also Torah Temimah, note 27, who elaborates.
What is the meaning os "u'Vi'arta Dam ha'Naki mi'Yisrael"?
Seforno: It means 'And you shall clear out (remove) the punishment for the innocent blood (that was shed) from Yisrael'. 1
Targum Onkelos and Targum Yonasan: It means 'And you shall destroy the shedder of innocent blood from Yisrael'
Seforno: See Mas'ei, Bamidbar, 35:33.
What are the connotations of "ve'Tov lach"?
Ramban and Seforno: Inasmuch as a. the murderer will not continue to kill and b. the people will hear about his death and will be afraid to go in his ways. 1
Ramban: Because compassion on murderers is akin to murder, both as concerns the murderer himself and as concerns others who will take their cue from him.