I guess this whole issue of religion is problematic. On one hand there's the philosophical treatise, which is the base of a religion, and on the other hand is the political existence of a religion(organized religion). Any philosophy if translated to politics, risks a semantic loss. Misinterpretations emerge. At the basis of organized religion are the compromises and misinterpretations. Jihad doesn't mean war against kafirs or infidels, one can't call anyone kafir just out of the blue and kill him. It rather symbolizes internal struggle or internal revolution which is quite close to the notion of internal revolution of Gramsci.
One can similarly say that communism faces major problems from within its framework as do the religions. The past of every organized religion is violent. If today Pope Benedict calls Islam terroristic, then I think catholic church doesn't have the moral high ground to talk on violence and terrorism, as it has violence at the basis of it's method of spreading the religion it preaches, and it has also suppressed voices, which once could have shaken the foundations of the catholic church, so the church felt it would be better to sentence them to silence - or just 'process' them, as Hitler had processed Jews in his Fabrik's in Auschwitz, Treblinka and elsewhere.
Terrorism is wrong, be it any form of terrorism. It stems from oppression, and oppression stems from disrespect for the Other. War on Terror is not the solution, it is tyranny. As bombs don't just kill terrorists, but also innocents. The problem is in fact the kind of political system prevalent the world over. A system ridden with hypocrisy, double-standards and corruption, doesn't facilitate a genuine, dialogue between cultures, which the pope sees as a solution. Moreover his point of departure "reason" as a common platform for the "genuine dialogue" is problematic. Then he talks about "faith". But this too is problematic.
If we don't respect each other, look down upon each other, then I don't see our problems dying down, futures of millions of children secure, youth not blowing themselves up in the name of "faith", which the Pope lays much emphasis on. To me its mutual respect for each others' domains, which is important at this point of time.