It's just impossible.
settype() function accepts the first parameter by reference.
See fo example:
<?php

function create_a_var(&$var) {
  $var = 'created';
}
create_a_var($doesnt_exist); // you would not expect a NOTICE here, right?
?>
settype() does the same.

Accepting a parameter by reference does not mean it's impossible to check for an uninitalized variable: 
<?php

function unintialize_a_var(&$var) {
  if (!isset($var)) {
    // Why should I uninitalize something uninitialized?
  } else {
    $var = NULL;
  }
}
uninitialize_a_var($uninitialized); // you would expect a NOTICE here, right?
?>

Anyway your (and mine) example function is useless, and it does not point to the problem itself afterall.

But if the function is about setting the type of a variable and the variable is not initialized I would strongly assume to get a NOTICE about this. Especially in PHP where a variable is created by using the dollarsign followed by the variabelename.

Would you expect to get a NOTICE here?:
echo $var;
var_dump($var);
intval($var);

I get a notice there. With your arguments you would not expect it here, right?

It's impossible to detect what you really want to get - either create a variable or get a notice.
PHP cannot get into your head and read it.

"either create a variable or get a notice."

settype() is not about creating variables. to create a varibale, the dollarsign ($) is used.

so only the "or get a notice" is left:

I don't want this to be a personal thing, so it infact does not depend on what I want to get. Additional, I don't want PHP to look into my head as well.

Maybe its more understandable, when I write down my motivation:

Normally I do use settype() to ensure that an already initialised variable is set to a specific type. That's all. In that case I wanted to get a NOTICE. Maybe this really is completety wrong, but using settype() on an unitialized variables makes no sense, because uninitalized variables ever contain NULL, so setting their type is completely useless. So if PHP ecnounters a NULL value inside settype, it's a strong signal, that something went wrong. So it might be nice of PHP to drop a NOTICE. It's like using intval() or echo on unitialized variables.