It doesn't sounds like you agree 100%.
Yes, it would take the BS out of the debate but the media have laden the word with meaning now. Now the branding has a huge significance. If nutbags with middle eastern background are called terrorists, when all other nutbags are just called nutbags, what do you think that does? It reinforces the "us VS them" mentality. That muslims are terrorists. This is what ISIS wants us to think. The only chance ISIS has of achieving their ultimate aim is to drive a wedge between muslims and non muslims in western countries.
If 8 million aussies buy papers that insist on using that language, 2 million of them sucked into the terminology and 1 million of them change the way they treat muslim people. Meanwhile a million australian muslims feel the change in the way they are treated, 500,000 if them are offended, 100,000 of them mention it in front of their kids, 5000 of them have dysfunctional relationships with their teenage boys who are struggling to find a place in society. 1000 of them spend too much time online...you get the message. We should be doing what we can to reduce those numbers. Doesn't sell papers though...