I think defining it as "evil" or "mental illness" is really just semantics. The fact is, someone murdered innocent people in cold blood. You're minimizing the issue by shrugging it off as "some people are just evil".
And you're minimizing it by claiming the targeted killing of these people is the result of mental illness. I'm sure it's very comforting to try and say "This guy must have been mentally ill", but that defense seems to be uniquely brought up when a mass murder is committed by someone white. School shootings, church firebombings, church shootings - these are all the acts of the "mentally ill", and not "terrorist attacks".
Aside from the fact that it mischaracterizes mental illness, it serves no purpose other than to throw an entire portion of the US population who lives with some form of mental illness into the camp of mass-murderers, and gives those who have not yet committed a mass murder (but otherwise share the same extreme beliefs) an easy way to distance themselves from a heinous act.
Congrats - you've made sure we continue to think of those with mental illness as crazy murderers, rather that this individual was a product of a culture that dehumanized those different from himself.
Maybe it minimizes mental illness, but at least it's more of an attempt at a response than "he was just evil". What do you propose we do with the purely evil people? How can we detect them early?
Also I think it's kind of a stretch to say calling this mental illness is propagating a poor image for all mental illness any more than calling cancer deadly makes ALL ILLNESSES sound deadly.