Are creatures destroyed if their destruction happens at the same instant they lose "indestructible"?
The destruction only happens once, it's instantaneous, and there's only one creature vulnerable to it when it happens.


  610.1. A one-shot effect does something just once and doesn’t have a duration. Examples include dealing damage, destroying a permanent, putting a token onto the battlefield, and moving an object from one zone to another.


Think of it a state machine. There's only two game states in the scenario.


State 1:  Timber Protector and some indestructible Treefolks are on the battlefield.
Action: Destroy all creatures.
State 2:  Timber Protector is in the graveyard. Some Treefolks are on the battlefield.