Supposing for a moment that the accusations of the SDAs and some
others are correct, that the Church uses the sword to destroy
heretics, what is wrong with that?

First we have the notion condemned as error:

http://www.papalencyclicals.net/Pius09/p9syll.htm

[It is error to believe that] 24. The Church has not the power of
using force, nor has she any temporal power, direct or indirect.

Now the question, why is that an error? Or in other words, why is it
legitimate for the Church to use force, particularly in exterminating
heretics?

Which is worse, loss of life or loss of Faith? The answer is that loss
of Faith is decidedly worse. One who dies with Faith (and in the state
of grace) will be in Heaven. One who lives, having lost Faith, is on
his way to Hell.

The insidiousness of heresy is that it inevitably draws away those
whose faith is weak. Those who are mature in Faith have less to fear
from heresy than do the babes in Faith, in particular our children.
The littlest of children become easy prey for heretics, simply because
they are not yet firmly established in Faith, and little children tend
to believe what they hear. Indeed, it is the most natural course, to
believe what one hears -- to disbelieve takes more sophistication.
That is one reason Our Lord said, "whoever does not enter the Kingdom
of Heaven like a little child will not enter it at all."

The Scriptures say, "ye shall not suffer a witch to live." But
heretics are worse than witches. Witches, it seems, do not generally
try to make converts -- heretics do. A witch can inflict harm, but
cannot inflict the loss of salvation. A heretic can inflict the loss
of salvation upon the little ones in Faith.

The final Word on this comes from Our Lord Himself:

Matthew 18:6. "But he that shall scandalize one of these little ones
that believe in me, it were better for him that a millstone should be
hanged about his neck, and that he should be drowned in the depth of
the sea."