Is demolishing the Kaaba not polytheism (shirk) or disbelief (kufr), knowing that its demolition is less significant to Allah than shedding the blood of a Muslim unjustly, and that persecution (shirk) is worse than slaughter?

The reason for the revelation of the noble verse: "They ask you concerning fighting in the Sacred Month (i.e. fighting in it is unlawful). Say, 'Fighting therein is a great (transgression) but obstructing (people) from the way of Allah, and disbelief in Him, and obstruction from Al-Masjid Al-Haram, and driving out its people therefrom, are greater with Allah, and Al-Fitnah is greater than killing.'" (Al-Baqarah 2:217) was the killing of 'Amr ibn al-Hadrami by the detachment of 'Abdullah ibn Jahsh on the last day of Rajab (the Sacred Month). The verse was revealed in response to the outcry and condemnation of Quraysh regarding this act, clarifying that their obstruction from the way of Allah, their disbelief in Him, their expulsion of Muslims from Al-Masjid Al-Haram, and their persecution of Muslims to turn them away from their religion, are greater and more enormous in the sight of Allah than killing in the Sacred Month.

The meaning of Al-Fitnah here is what the disbelievers used to do to Muslims to turn them away from their religion back to disbelief and polytheism. This means that their polytheism and disbelief in Allah are a greater crime than killing.

As for the Hadith "Indeed, the sanctity of a believer is greater than the sanctity of the Kaaba," it is sahih li ghairihi (authentic due to external corroboration). The meaning of it is to emphasize the sanctity of a believer and the gravity of shedding his blood without a lawful right, and it does not mean to belittle the sanctity of the Kaaba. Both have great sanctity.