Jason - I don't know if my comments are exactly responsive to yours, but here goes:
I've seen "Capote" but I've not seen "In Cold Blood." I've also seen lots and lots of documentaries and TV shows about murder, death, deceit, etc. I don't think I have a problem at all with using the actual scene of the crime in making the film, especially where "In Cold Blood" was meant to be as accurate as possible. To me, it is akin to what "Cold Case Files" and several other TV shows try to do when they make a show about someone getting murdered. Such shows almost always show as much actual footage as they can. The only difference between those TV shows and "In Cold Blood" is WHAT the show is trying to say. In the TV shows, the focus is usually on how the police ultimately solved the crime, and "In Cold Blood" seems more to be about the actual killing and how the crime was completely senseless.
So to me the question is, societally and individually, "Can I empathize with the victims?" That to me is what horrific violence is all about. It's why I was much closer to tears in "Law Abiding Citizen" when his family was killed in front of him than I was in "Rambo." The fact that both stories are completely fictional makes me be able to enjoy the films without really feeling bummed out, and conversely, it's why when I watch "Saving Private Ryan," and "Band of Brothers" why I am always a little sad, and it's why "Schindler's List" was so powerful and depressing.
And I think that's the point. When a film is made about actual tragic events, the point is to feel human. We are supposed to empathize with the hurt, loss, terror, etc. of the people depicted in the film. I believe that using the actual farmhouse is just one more way to let us in the story. It may be unnecessary to tell the story, but it does add to the reality of it, and ipso facto our feelings (as evidenced by the fact that you found it distasteful).
Violence in film is a tricky subject. On the one hand, showing actual violence takes us from saying "Oh that's a shame" to actually forming our own horror/sorrow/whatever to the events. And such feelings are difference between seeing something on the news and forgetting about it the next day, and remembering the story for a long time. But I also understand why most people wouldn't want to have those feelings, and why we actually crave non-sentimental violence in our movies.
That's what I think.
-comments by Andy