You have hit upon the philosophical justification for the insanity defense: if a person is so mentally screwed up that they cannot even understand that what they are doing is wrong, then there is no justification in punishing them. However, if there is a basis to find that they could appreciate that shooting patrons of a movie theater is wrong, then they cannot evade the criminal consequences.
Your post caused me to check Colorado’s statutes regarding insanity. I practice in Indiana, and Colorado has very different statutes. The test for insanity in Colorado is phrased differently, but it is the same test: “unable to appreciate right from wrong.” The procedure is much different. In Indiana, once insanity has been raised as a defense, the defendant has the burden to prove they are insane by a preponderance of the evidence. Under Colorado law, the Court appoints psychiatrists to examine the defendant, and then determines from their reports whether the defendant is permitted to raise the defense at trial. If the Court permits the defense, the State must then prove beyond a reasonable doubt that the defendant is sane. From a legal perspective, the prosecutor in Colorado has a more difficult time than he would in Indiana.
The result of a trial where insanity is raised as a defense is “all or nothing.” If he’s found guilty, he’s sentenced, but if there is a certifiable mental disorder, he must be given psychiatric treatment. If found not responsible by reason of insanity (it’s not “not guilty,” it’s “not responsible”), then he’s committed to the mental health agency for regular mental commitment proceedings. Indiana offers a jury the middle ground of finding someone “Guilty but Mentally Ill,” which is still guilty but the Court must take mental illness into account as a reason to reduce a sentence, and the person must receive mental health treatment.
Having said all that, juries (at least those composed of regular folks, not whack jobs) do not like the insanity defense. As a practical matter, despite what the Colorado criminal code says, a defense lawyer pushing an insanity defense will have to show a long history of documented diagnoses of mental illness, and not just a client who acts goofy after killing a lot of people.
If I were prosecuting this case in Colorado, there is one salient fact that I would pound relentlessly: the guns in the car outside the exit door. If the guy could not appreciate that what he was doing was wrong, he would have tried to take all the guns into the theater past the ticket window and ticket taker, with no attempt at concealment. The fact that he had to conceal the guns outside an exit door shows he had a minimal understanding of the wrongfulness of his conduct, and that also shows that his thinking was not so disordered that he could not concoct a plan to get around the question of “how do I get my arsenal into the theater?”
Why must the only consideration be to "punish" them? Why can we not simply acknowledge that they represent an ever present danger to others and therefore ought to be killed on that basis alone? This is the methodology we use with bears that kill, or mountain lions, or dogs, or monkeys.
We kill "sane" people who murder. Do we do this to "punish" them? Or do we do this for it's deterrence effect on other potential murderers?
I would suggest the entire legal system is based on the theory of deterrence. The operational theory is that if we do something bad to people who commit crimes, others who contemplate committing crimes will refrain.
The prime function of the "justice" system is that of deterrence, because if some means isn't utilized to convince people to control their own behavior, no army would be big enough to be able to force them to do it. Again, the main function of the Justice system is to deter criminal behavior. "Punishment" is really just a tactic to achieve the higher goal, which is deterrence. "Punishment" isn't necessary in and of itself.
Again, the main purpose of the legal system is to protect people by sending a message to the general population, not to explicitly "punish" someone.