The fact that everyone is so worked up about Terrorism shows that it is in fact quite effective as a tactic. I don't see it as being any more despicable than asking 10,000 young men to charge through a field of barbed wire into the muzzles of machine guns and artillery, nor more immoral than killing 30 or 40 women and children with a cruise missle on the off chance of killing an enemy commander.
Terror has always been a part of waging war. Cities under siege all the way up to the Napoleonic wars were usually given the option of surrendering and receiving relatively good treatment or fighting and being slaughtered to the last dog and cat if they beseigers were force to storm the walls. Another common way to break a siege was to go around killing everyone in the surrounding countryside until the forces in the city could not stand watching it any longer and came out to fight.
Terror tactics are the only available weapon of the weak. Religion has little to do with it except as a recruiting tool and a way of maintaining moral and unity. The Romans considered decimation (killing one person in ten) as a legitimate method of subduing the unruly. Robin Hood was a terrorist, but he is looked upon as a hero because his side won. The British considered the American freedom fighters in the War of Independence to be terrorists who were using force to overthrow a legitimate government. If the British had won, many of them would have been hung for being enemy combatants.
This is not to say that the cause of the current lot of terrorists is just, although given the number of people willing to support them, their objectives, if not their idiology must have widespread appeal. I am only saying that their strategy and tactics are the same ones that people without access to a powerful army usually resort to when they decide to fight. Modern technology has given them the force multipliers that make them more effective than in the past and modern mass media has raised their profile, but little else has changed.
As for the 72 virgins thing, I doubt that most of the people doing the actual fighting are as blindly religious as the western press would like us to believe. They are a mixture of the desperate and the angry. Just like always. Terrorism is a tactic, not a way of life.