a) the term will gradually lose its pejorative meaning, and
b) we don't know what we are fighting against, so we won't know when/if we have won.
A friend and former co-worker, Jordan Brown, offered a distinction that I think is useful:
In Police Action, you don't expect civilian casualties. You accept that they may sometimes happen, but they are rare, and usually lead to an investigation into what you did wrong.
In War, you expect civilian casualties, but you do your best to minimize them. When you bomb weapons factories, transportation facilities, etc., it is inevitable that some noncombatants will be killed and injured. But that isn't the purpose of the action -- the purpose is to disable the enemy's war machine.
In Terrorism, civilian casualties are the goal.
I consider this distinction important, because in the last 10 years there has been a tendency to refer to nearly every action against the United States as "terrorism". When a member of the resistance kills US soldiers with an IED, that's not terror. That's war. Guerrilla war, to be exact. Soldiers, by definition, are there to be in harm's way. The same applies to "civilian" employees of contractors like Blackwater: they may not be part of the army, but they are doing military-type activities: surveillance, patrolling, guard duty, etc., and they are armed.
IMO, we need to distinguish between "enemies" and terrorists. The men who damaged the USS Cole were engaged in war, even though President Clinton referred to it as "an act of terrorism, it was a despicable and cowardly act." No. The USS Cole was a warship, a legitimate military target.
If everybody who dares to oppose the US armed forces (even when we are in their country) is a "terrorist", then what incentive do those who would like to keep us out of their country have to restrain themselves to only attacking our armed forces and war machine? After all, civilian targets are so much "softer" (less well defended). If you're going to be tarred with the same brush (and tried for the same "crime"), why not go after the easier target?