Chirac makes this distinction because that allows him to dismiss Islamic acts of terrorism as aberrations or perversions of Islam and as the acts of isolated individuals. This way the problem seems smaller and it is easier to put off dealing with it. If he actually faced the truth, that Islam itself is the problem because it encourages violence, then he and the other western appeasers would actually have to deal with it.
Moreover, think of how much easier it is for people like Chirac and the New York Times to blame the pope for the violent, hysterical reaction of Muslims. The pope isn't going to kill someone who criticizes him but the Muslims obviously would.