Reasoning with terrorists might be the easiest and most practical way of solving a problem, but that doesn't make it the most moral. I don't believe in reasoning with evil people. To do so is to accept and validate their views. If you accept evil as valid, you're evil yourself.
If someone was holding a school full of children hostage, and they said "Hey Unne, take this one baby and kill it, right now. If you do, I'll let all these children go. If not, I'll kill a hundred children". Would you say it's right for me to kill the baby? That's what it means to bargain with terrorists. If I allow myself to be controlled by evil people, what does that make me? It makes me evil too. If a government allows itself to be controlled by evil people, what does that make it? That is what bargaining with terrorists is: willfully granting the terrorists control. The only moral thing to do is to stop the terrorists. Never to do what they want.
There's always a choice. You can let the terrorists dictate the terms; that's what negotiating with terrorists is, because that's what they want. If you do so, you're admitting surrender. Good surrendering to evil; what do you think the result of that will be?
Or you can play by your own rules. For example, the rule "Never, ever kill innocent people", or even "Never kill anyone; just talk about stuff". If you do so, you will fail, because the enemy doesn't respect your rules. Wishing for something doesn't make it so. Telling someone to be peaceful doesn't make them do it. Proclaiming killing to be wrong doens't stop killers. If the enemy violates your rules, then what? If you decide everyone should be peaceful, and a terrorist kills people anyways, then what?
The other alternative is to play by the bad guys' rules, and win. The only thing to stop force is force. If terrorists hide in a church and shoot rockets out the window at your troops, blast the church into the ground; it's not you killing any innocents who may be inside, it's the terrorists for forcing you into the situation. If a 4-year-old runs at you with a bomb on her chest, kill her before she gets to you. It's not you who just killed that child, it's the one who strapped a bomb to her. If there's any possible way to avoid killing, then don't kill. If there is no way to avoid killing, then kill, and kill as well as you can kill, because anything less will result in failure.
So far as I'm concerned, there are two rules for war. First rule: Be sure you're right. Second rule: Win. In the case of terrorists, I am sure that I don't deserve to die, because I've done nothing to anyone to warrant death, and someone who is trying to kill me is wrong. What's left is to do what's necessary to win, and that usually involves killing. No more than what's necessary; I don't condone needless destruction. But just as importantly, no less. The difference between us and a terrorist: we are right, and they are wrong. They started it, we'll finish it.