While you could say that there is an elevated chance that the terrorist is of Arabic descent (and frankly, the odds there are not that strong. Maybe better than 50%, but I wouldn't put my money even on that...) that is only a small part of the picture. You must also consider the possibility that any given person of Arabic descent is a terrorist (an absurdly small probability). When you combine these two factors then you can decide how probable it is that he is the terrorist, given his descent.
If you actually work out the numbers here, you will undoubtedly discover that the probability he is responsible falls well below any rational standard for harassing the man.
Edit: To get a grip on what sort of standard you would usually demand: consider a murder in a small isolated town. With no clues at all, lets say the murderer could be anyone. In a town with 3 people, each person could be said to have a 50/50 chance of being the murderer. Is that enough for search warrants for both (not under our legal system, but just ethically/morally)? Sure, I'd accept that. If there were a hundred people in that town? No way. So, does "terrorist, given arabic descent" go over 1%? I HIGHLY doubt it.