Islam is certainly religion of peace. Islam itself means etymologically 'establishing peace'. Salam means peace and Allah's name is ;Salam' i.e. peace and so it is the duty of good Muslims to establish peace in the world.
Islam is to willfully submit to the Creator of all that exists, in obedience to His commands. The result of doing so is peace.
Not all terrorists are Muslims. Instead they come from varying religions or walks of life. Some are Catholic, some Protestant, some Jewish, some Hindu, some Atheist. The reason why it may seem like most of them are Muslim is due to their religion being mentioned whenever they report their terrorism in the media. If the religion of non-Muslim terrorists was mentioned, this would greatly change the perception. Similarly if the acts of terrorism committed by those of other faiths was actually referred to as terrorism, things my seem different than they do now.
The Qur'an forbids injustice and oppression in all of its forms, including terrorism. Muslim soldiers in wartime are not allowed to attack civilians or destroy property. Muslims are not allowed to kill themselves. Muslims soldiers in wartime are to treat captives in a kind manner.
The problem lies in some weak-minded people being corrupted by the false interpretations of others, who then convince them to do these horrific acts. Similar to how the African slave trade or the bloody colonization of the Americas was seemingly justified by Christians, due to a misguided interpretation.
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Not all terrorists today are Islamic. Media is, however, highly selective, and loves to talk up the threat of religious extremism whilst ignoring the homegrown terrorists that blow up their own countrymen. They make better stories.