kashmir has been a breeding ground for islamic terrorists from quite some time now. some consider it an achievement that there has not been any loss of life (as a result of recent restrictions). there are vested political interest at work from all sides involved and nobody cares about anybodys rights.
But if you come in from the capital and take away their rights from innocent people (i.e. anyone other than the "2" you mention in your example) without the consent of that community, then that's evil oppresion - and the factors you mention are weak excuses, they certainly are not valid justification for that.
>Is it justified to temporarily suspend rights/privileges of 100 innocent people
Which the answer is always no. Saying otherwise opens the door to more police state factors encroaching upon the rights of the others. The same thing is happening in Xinjiang against innocent muslims there and in no case is unlawful detention without reasoning ever justified.