As a diabetic, I have enough things to worry about while travelling in addition to the usual TSA nonsense. I don't need to be worrying that my insulin will be confiscated. Every insulin bottle I've ever had has been 10 mL, well under the liquid limit. I've never tried travelling with ice packs but there is no reason they shouldn't be allowed in this case.
This story is scary because the TSA confiscated the insulin and didn't tell her. She is lucky that she was only travelling to Arizona where she should be able get insulin fairly easily. What if she was travelling out of the country? I would hate to try to get medications while in a Caribbean country, for example.
I really hope this TSA screener is fired. There is no excuse for taking someone's medication. To take it without telling the person is even worse. It's bad enough to worry that my electronics are going to be stolen. I shouldn't have to worry that my medication is going to be taken.