I saw the faulty logic part of the character flaw within the elders. You said it best, the elders tried to create a society devoid of tragic death but ultimately failed to make adjustments inspite of a reasonable solution. Their failure to act was not a result of faulty logic but of hubris. Walker the elder swore and oath not to return to society. By sending his blind daughter, he kept his oath and because she was blind, her innocence was spared. Moreover, because she was attacked by one of the beast, her illusion was spared as well. As for the elders, they all chose to continue living as they had for the past 20 years, though I imagine with heavier hearts, knowing that they could have done more prevent illness and death all along.
I agree that for all intents and purposes this story would make a decent 1/2 Twilight Zone episode. Still, there was enough chills and suspenseful scenes for me to like the film, even without special effects. After reading so many posts here, I think it is a film worthy of discussion.
For the record, I thought Sixth Sense was amazing - easily a 9.5 out of 10. I enjoyed Signs a bit; would give it a 6 or so out of 10. I've caught peices of Unbreakable on TV (pun intended) and plan to rent it - the scenes and premise look intreaging... But I'll check reviews before I'll pay full price for one of his movies in the future.