Yes, the U.S. could immediately say that Arafat is a terrorist if we want to go ahead with declaring war on all of Islam.
On the other hand, if we want the vast majority of the Islamic world to fight with us against terrorism, if we want the Islamic world to change for the better by finally agreeing to live in peace with Israel, then we are going to have show incontravertable evidence of Arafat getting caught being involved either with 9/11 or with Al-Qaeda today.
And frankly, I think that we are close to that point of being able to show that Arafat is dirty, even to a very skeptical Islamic world.
In the meantime, withdrawing from Gaza is yet one more way that Sharon and Bush are boxing the terrorists in (conceptually). I don't expect you to like it. I wouldn't stand for it myself if I lived in Israel, but if Israel plays along smartly for just a tiny bit longer, then this whole plan will overwhelm the terrorists. They are boxed in. They simply have no way to stop their own defeat now.
It is not terrorism to target a non-Muslim, by the thought of militant Islam. Neither are non-Muslims people civilians, they are combatents.
The Islamic world's governments are on the side of Arafat and his organization's quest to destroy Israel.