The objection that at some point "Levant" was colonial is a canard. It was rejected not because for a while it was colonial--the term existed before Western colonialism really got started, pretty much with the same meaning it had after colonialism. (Funny, that--we typically use words for their conventional meanings and don't radically redefine unconventionally them with every utterance.)
The original translation "Syria" was rather a hopeful one. They were in Syria and Iraq, and it would have been damned handy if that's all they wanted. "Damascus" is a foolish proferring, since ISIL isn't in Damascus.
Rather like calling the US Army "The Army of the US and Siberia Russia"--somebody, presumably the Russians who have an army already stationed on their territory, Siberia, would be likely to object.
It quickly became clear that "Syria" wasn't al-shuriya. Otherwise they probably would have said "al-shuriya."
Some translator, two clever by half, probably decided to dig down into older meanings of Syria that blurred the lines with "Levant." Syria used to mean a larger area than the modern country. (But not quite as big as Levant, for the most part). Then again, al-shuriya also meant the same area.
I go with Levant. ISIL. People like "Isis" now because it's a nice word of English. They know how to pronounce it. "ISIL"? Is it 'eye-sill? 'ih-sill? ih-'seel? ih-'sill? And just what the hell does "Levant" mean? A wordsmith has to learn a new word? The horrors.
As for the concern that the fighters might take umbrage if we use a word that they object to ... Decades ago I stopped saying "Yes, sir" to people who no talk me language fluent-like when they make pronouncements as to what I'm allowed to say. If I don't grant them authority over me, I don't grant them authority over me. "I refuse to acknowledge that you have any right to rule me. What, you don't want to be called 'you,' but 'the lord of all righteousness who defile blasphemers like me while I groan in delight'? Why, yes, of course, you're right. Don't want to give offense."
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