Pedantic nitpick: “drop the building” isn’t a euphemism. It literally reflects the intended action that will lead to the desired result (if the insurgent dies great, if not the threat is eliminated anyway).
To say "drop the building" when it means "destroy the building (and everyone inside)" has that same horrifying whitewashing feel that "light up" has for me. The bland language allows people to do things they otherwise (hopefully) couldn't/wouldn't.
"Drop" is a term of art from the demolition industry. The U.S. Army does a lot of non-combat demolition work, the Corps of Engineers in particular, and the language carries over quite naturally.
In this case, "destroy the building" is less accurate than "drop". Their goal was complete demolition, to prevent the building from being occupied by more fighters. The intended audience of this article will understand the language clearly.
The article describes the problem as a building that extends above the surrounding 3-story neighborhood. (5 if I remember right) That is the problem to be solved, so carving off the top couple stories would do the job.
There are less-practical solutions. One could pull out the 2nd and 4th stories, like playing a game of Jenga. One could shove the whole building down by two stories, fully intact, giving it two basements.
So "drop" seems especially fitting here. The highest point needs to drop by two stories.
