You just quoted the line prohibiting the forcible transfer of protected persons **OUT** of occupied territory. That, of course, has nothing to do with the transfer **IN** of citizens of the occupying power. That's covered by the last line of Art 49: "The Occupying Power shall not deport or transfer parts of its own civilian population into the territory it occupies." NOTE: that line says "transfer", and not "forcible transfer" i.e. colonizing occupied territory with your own citizens is UNCONDITIONALLY prohibited.
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Preliminary report: Shooting attack in East Jerusalem's Damascus Gate (Haaretz)
from the article: Israel policy allows settlers to rampage unchecked