Is just a question of numbers, the native Libyan population was low and the Italians occupy the coast city aka the best place, sure the border is porous but first any possible independent Algeria or Egypt (a big if with a different WWII) must find acceptable to go against Italy who now is still a big power and second the rest is much desert not very hospitable.
Italians represent 13% of the population, add some more due to the fact that the war will not touch Italy for a while and even in that case not in the scale of OTL so the plan to settle colonist will goes on, what's more probable is a IRA like low level war, but Algeria and Libya are two different beast...if the arabs begin an open rebellion due to the coming of the colonist, well i don't want to be in their place, Benny considered the place a showpiece of the regime plus there is oil, it will not be given up for any reason.
Yes, I agree, in the 20's and 30's when Italy had acquired Libya but was only starting to assert itself in the colony, the population was indeed quite low, and Libya certainly isn't as highly-populated as say... Egypt. However, my argument is rooted in the fact that this is going to change in a
big way come the 1950's, and that even with oil, which is actually a relatively low-cost industry with regards to labor, is not going to be enough to reverse it. The Italians need the Libyans, after all, Italians aren't going to come to Libya to be janitors, busboys, and housemaids, they're going to want something glorious to justify the risk of leaving their homeland for a country in which they have nothing. The Libyans are going to be the people who do the jobs that nobody wants to do and for cheap, this happened in every other European colony, and it certainly happened in the most readily-available example of a similar colony: Algeria, which at its peak actually had more French settlers as a percentage of the total Algerian populace than Italian Libya did.
Libya fundamentally has nothing to offer the Italians before oil. Balbo ran a good show of it when he controlled the colony, but what kind of growth was that really achieving? What was going to come out of it? Or would the booming Libyan transport network and settler rush fall apart as soon as the next economic downturn hits? Far more likely the latter. Economic history is rife with examples of artificial economic booms built on a foundation of sand (literally in Libya's case), without oil, there's nothing to justify the kind of investment the Italians were making into Libya, and it would have crashed badly during a recession. Settler colonialism is about people
wanting to come to the colony in question. Algeria could offer farms and good land, Libya doesn't have that same luxury.
The Italians did all the bad stuff: concentration camps, mass deportation, brutal colonial wars in the Libyan desert, it didn't quench the Libyan desire for independence, it merely reduced the flames of active rebellion to the embers of resentment, waiting for the next chance to erupt into a towering blaze. Genocide? Nah, they need cheap Libyan labor, and lots of it, to keep the colony afloat. The idea that the Italians were somehow any less moral than the French who resorted to lots of dirty tricks to keep Algeria is a bit off. Italy does not face the same situation as Germany did in Southwest Africa, it faces contentious, hostile natives who will take efforts to "drive them into the desert" (then again how do you use the desert to kill people who are used to living in the desert?) as the suppression and genocide that it is and revolt, at which point the metropole runs the risk of losing the entire colony. Colonial powers knew that this sort of thing could happen, and this rather than any notions of morality was generally what stayed the hand of colonial authorities in dealing with rebellion.
And as for the idea that Egypt won't support Libyan rebels, well how does that explain all the training, funding, and outright sanctuary given to SWAPO during the South African Border War by neighboring African states? Or Egypt's own adventures with the nationalizing of the Suez? Nobody liked the prospect of the SADF blitzing into their country, but they did it anyway because the commitment to opposing it was that strong. What could Italy possibly do as a recourse? Invade Egypt? In what parallel setting will the British, the French, or anyone else with interests in Suez Canal simply allow the Italians to bulldoze their way into Egypt? To any reasonable outside observer, it will look like Mussolini is falsifying a pretext under which to seize control of Egypt.