That is how I would parse the distinction between a "terrorist" and a "guerilla" or "freedom-fighter." Regardless of whatever method you use, from conventional weapons to WMDs to suicide bombings to IEDs, if you target military personnel and apparatus, you are the latter. If you engage civilians in order to effect a political outcome, you are a terrorist. I have zero qualms about lumping in the aerial bombing campaigns of World War Two under this heading, either, or the Viet Cong habits of attacking sympathetic civilians.

On the other hand, collateral damage among civilians in a clear attempt to target legitimate military targets or guerillas or terrorists is acceptable, within reason. Obviously, blowing up a crowded theater to get a single soldier in the audience is a bit extreme, or decimating the civilian population of a town because terrorists are known to be hiding among them.