Someone identified as "Curious" has posted a comment asking for my comment on an article by Justin Raimondo which is entitled "The Objectivist Death Cult". I'm afraid the limits of my tolerance do not extend to analyzing articles that refer to Objectivists as a "cult," never mind a "death cult."
However, I realize the specific issue that he asks about is not obvious. I recommend you take a look at the Morality of War section at the Ayn Rand Institute which has a wealth of analysis and explanation. I also highly recommend Elan Journo's new book Winning the Unwinnable War.
Let me add that I also struggled with this issue immediately after 9/11. When I first heard Peikoff speak on O'Reilly, I was not at all convinced he was right. Frankly, perhaps I had gotten too used to the way war is portrayed in movies with the good guys always taking care not to harm any civilians. However, I became more and more convinced that Peikoff was right as I watched how we fought both the Afghanistan and Iraq wars and how both efforts were severely hampered by an excessive regard for the enemy nation. It also helps to remember the details of how World War II was fought and won. The point is the primary consideration ought to be what is necessary to achieve quick and complete victory (which would also require a much more exact identification of the enemy to be defeated). Crucially this means crushing the will of the enemy to fight.
Morally, when a nation goes to war, it should value the lives of its citizens, including its soldiers, above the lives of the enemy civilians, and of course soldiers. War is a collective endeavor -- nations go to war and each side must treat the other as the enemy until hostilities cease or one side wins. To the extent that the enemy population is opposed to the enemy regime, then of course, the rebels (assuming not also directly hostile to us) should be encouraged and it would be counterproductive to attack forces that are potentially allied with us. However, to the extent that the population is united behind the regime or neutral or opposed to us as well then their deaths may be necessary to destroy our enemies and thus win the war.
Unfortunately, all wars result in truly innocent persons such as children getting killed. The moral blame lies with the initiator of force and those who made him possible. The nation engaged in defense ought to fight to defeat the enemy as quickly and as convincingly as possible so that there is no mistaking who is the victor. Only then can the killing stop and the rebuilding begin.