You can't do it

Bad guy: I'm going to kill him. (him=Will)

Good guy: You can't do that!

Bad guy: Who said that?

Good guy: I did. You can't do it. Will doesn't deserve this.

1) Is it natural to say "you can't do it" to mean "I don't want you to do it"?

2) I have underscored "that", "it", and "this" in the dialog. Are those the pronouns you would use in the places I have?