It's especially insane given that, without some sort of weapons/explosives/tools, even the most l33t terrorists that ever crawled out of somebody's paranoid fantasies are basically reduced to kicking fellow passengers, which is about as threatening as your average onboard inebriate.
Unless even the super-double-plus-enhanced version of TSA screening is utterly ineffective(could that be possible? Heaven forfend!), you could transport basically any terrorist you felt like in relative safety(if you had too many of them, I suppose they could defeat the other passengers in hand to hand combat and start pounding on the cockpit door; but a modest percentage would be harmless).
Aside from the "haha, due process, you tell funny joke, yes?" angle, there simply is no justifiable set of people to include on the 'no fly list'.