I favor graduated escalation in kind. Figure out the home village of some of the key terrorists, and destroy it, maybe letting the people get out first. Next time, no warning. Next time, a city of 10,000. And if they don't stop, they will be removed forcibly from their homes and scattered to the winds. Chechnya ceases to exist. Landless Russians can become farmers in Chechnya. The Russians should never have let the Chechnyans return. A Muslim region in the middle of a modern country is a tinderbox, waiting for a spark.
Lets turn Mecca to glass first, then we can ask "how do you like me now?".