What is Islam's guidance about fighting terrorism?

We start by quoting from the Quran :

 Whoever slays a soul, unless it be (with legal cause) in retaliation or for terror in the land, it is as though he killed all of mankind: and whoever saves a life , it is as though he saved all of humanity;

Did The Messenger of God really call these terrorists "Dogs of the Hellfire, and the most corrupt of all people?"

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