It's not necessarily improper to unmask someone, constitutional issues about the collection itself aside, if appropriate procedures are followed for an appropriate purpose. It is exceedingly improper (and, yes, illegal) to leak the unmasking as was done to Flynn. Logically, what should have happened in this case would be simple:
1) Obama kicks out Russian diplomats, creating an incident 2) Flynn, as incoming National Security Advisor, talks to the Russians and requests they do not escalate. 3) For whatever reason the conversation with the Russian ambassador gets intercepted and people ask who is this guy asking them not to escalate? 4) Flynn is unmasked to those individuals and they say "Oh, he's the incoming National Security Advisor. That makes sense." The issue gets dropped.
Instead, someone leaked the information to the press to create a scandal, which the FBI used to conduct an ambush interview and get Flynn fired.
So the question is: who leaked the call? That leak was illegal -- and likely it was one of the people on the unmasking list who did it.