You and op describe tactless people employing a thought stopping phrase that they are most likely intending to be comforting.
Sometimes intent doesn't matter at all. Sometimes intent is everything. When you're making emotional space to grieve with someone, that's one of the times intent matters more than the words you're going to say. You will put your foot in your mouth. That's a reason why I try (big emphasis on try) not to blame people for unusual words or actions when they're grieving. It's your presence and your affection, your validation that matter more than specific words.

Sometimes you have to recognize the intent and let the specific words go. If you're close enough you can explain why so many people hate the phrase, but I wouldn't expect a receptive audience from any but the closest friends.