To say it shouldn't regen because it's a buff is an odd statement. Most buffs don't deal with a stat that can depleted and replenished. Do you think if a character has Health Up they should not be able to be healed?
As for why SEE doesn't seem to drain it, I have two thoughts. One, he simply can't because while it effectively adds to the practical protection pool, it is not part of the Max Protection stat since it is extra protection based off of Max Health.
Two, maybe he eventually could nullify it, but JML doesn't take enough turns before the battle is over. I don't observe these battles so I can't assess if this seems true; JML may indeed take more than enough turns to see whether this might be true. But here is my thinking:
We know from Dev statements that the protection bonuses are computed and then multiplied against protection. An r7 JML has +70% protection, or +80% at r8. If Revan is present, there's another 5%. So JML starts with 175% protection at r7. So it will take until the third turn until SEE's -80% reduces his protection to 0 anyway. Now, the ratio of health to protection depends on modding. But if a user running Bastila lead has opted to maximize health over protection to milk the Protection Up, JML can have nearly twice as much max health as max protection. I think leadership abilities take place before uniques, so in that case Bastila's bonus protection adds a physical amount of protection equal to around 400% of JML's max protection. If the Protection Up takes into account his GL bonus health, it's even more. So if the max protection percent is calculated first and the Protection Up is added to that number, then his Max Protection modifier needs to be quite negative before the total goes to 0. Depending on modding and when Protection Up procs, it could take almost 10 turns.
Now, this could very well not be how it works, and maybe JML is taking well over 10 turns while Linked. But we do know that Malak does not gain protection up because of his unique being coded as having -999900% Max Protection, which many consider to be a bug. However, he has an extra flat value of -9999 (additive) to stat Max Protection, which SEE doesn't seem to have. So maybe Protection Up adds to the flat stat number, but the percent is always rounded up to 0%. So maybe SEE nullifies the percent to 0, but Protection Up still adds onto the flat.
Either of these explanations could be very wrong, but in any case, the devs are unlikely to change any of these interactions.