Terrorism: defined by the victim as the attempt to not only kill, but cause a generalized panic in a populace, leading to instability of everyday life.
Terrorism is the language of the victim, not the perpetrator. The perpetrator will always see their actions as legitimate acts of war. So, we call what al-Qaeda did on one day terrorism and the people of Iraq call what we do daily terrorism. Thus, it is not a fixed term, but rather only one of great rhetorical power: call it terrorism and you rally sympathy and support.
The term isn't very instructive or helpful, to my mind.