No, Islam does not owe it's success to terrorism or coercion.
I’d like to invite you to reword your question.
After looking at the Arabic text, the translation is done completely wrong. The Arabic word is ruebay, which DOES NOT mean terror but AWE. I’ve attached the original Arabic text (see bottom of post) and put a box around two words, which mean ‘helped with awe.’
If you lookup the word Awe in an English dictionary, you will learn that it means:
noun
- 1. a feeling of reverential respect mixed with fear or wonder."they gazed in awe at the small mountain of diamonds"
verb
- 1. inspire with awe."they were both awed by the vastness of the forest"
The real translation of the Hadith is "I've been helped with awe" and the Holy Prophet Muhammad (peace be upon him) was talking about himself personally not about Islam.
The ruebay used by the Prophet was that of his character, his morals, his spirituality, his promoting the virtues of forgiveness.
You cannot simply take one quote of what he said and base your suppositions on Islam's victory. You need to look at the life of the prophet and see how he behaved with people. He did not terrorize or coerce them into becoming Muslim. The prophet saw Islam spread the most after the treaty of Hudaibiya (Peace between Mecca and Medina) and this treaty was breached by the Meccans. Even after Mecca was conquered, a general amnesty was declared. So Islam does not owe it's success to terrorism.
I urge you to take basic study of Islam under consideration. Here are some resources that are unbiased and will help you formulate a solid understanding. Any library in North America can help you obtain them:
Elementary Study of Islam - Mirza Tahir Ahmad
Islam: A very short introduction - Oxford Press
Muhammad: A Biography of the Prophet - Karen Armstrong
Should you wish to discuss this further, please let me know.