The Word: Terrorist

We all have different associations with words, depending on our culture, upbringing, religion, society, habits, memories, experience, etc.
One of the most charged words in recent years is the word "terrorist." For many in this society, we have come to immediately associate this word with middle eastern men, willing to die and kill for their religion. They are people who wish to bring down our great civilization and destroy democracy, take us "back to the Stone Age," as my father would say.
As defined by the dictionary, terrorism is the "political use of violence or intimidation."
In post 9/11 America, the collective definition of terrorism/terrorists is Islamic extremists. They are suicide bombers who wish to kill Americans.
Americans have come to associate the word "terrorist" with people from the outside. People that come from the Middle East, worship Allah, people that are different from us.
When Rosie O’Donnell asked the question: "655,000 Iraqi civilians are dead. Who are the terrorists?" there was an outcry from many Americans. So used to the meaning of terrorists as "other," they are unable to critically look at themselves, our army and our policies as terrorism.
Simply stated by definition, terrorism is the political use of violence or intimidation. By taking a step back, by de-identifying, it is clear that our policies in Iraq are political and we have used military violence. Aren’t our prisons a form of terrorism, isn’t our practice of torture on detainees terrorism?
Terrorism is simply a word…with a lot of political power. It has been used by a president and his administration to go to war, it has been used to create Big Brother legislation, it has been used as an excuse for torture in Guantanamo and other prisons. But in Iraq or Palestine, or any other part of the world, their common understanding of (the common usage of the word) terrorist is most likely completely different.
Is either usage correct or incorrect?
Or are words just empty shells to be filled with power in the service of other hidden purposes?