Describing a person as an “illegal” immigrant is dehumanizing

How so?

given that only acts can be legal or illegal, not people

Yes, that’s why it’s “illegal immigrant” not “illegal person”.

“Undocumented” immigrant is the generally accepted term.

Among some people, among others it’s “illegal immigrant”. Undocumented is wrong, the people have documentation, they just don’t have the legal right to reside where they do.

one is clearly more dignified than the other.

No, they’re both equally dignified, you’ve just been snarfing down propaganda.