It's not the same thing

They're targeting these guys for assasination for things they might do, or are suspected of doing in the past. It's not like they catch them in the actual act of committing terrorism.

So to satisfy your Strawman it would be the equivalent of finding a bank robber months after the robbery inside his house, and the police blowing it up with his family inside to get him. I don't think that would fly in any reasonable society

Edit: Interestingly here is a RL example that happened today, terrorists caught robbing banks, beaten by the cops then mugshots digitally altered so nobody would see the wounds http://www.guardian.co.uk/world/2013/feb/04/greece-police-lo...

That's not really the same thing. A better analogy is this: the police have credible intelligence that this person is connected to a ring of known bank robbers, and that ring is planning a robbery, so therefore they have the authority to kill him.

that sounds like thought-crime

Well, swap out "robbery" for "mass murder, usually using bombs in crowded civilian areas".

The police will shoot him on sight only within some very well defined circumstances such as:

  - Poses an immediate threat to the public or the officer

They shouldn't immediately shoot him if

  - there is no weapon in sight, or
  - the weapon is pointing at the ground etc.

In any civilised society there is no room for summary execution.

Obviously preserving human life trumps any other concerns, this includes the "bad guy's" life.

The policemen would be guilty of murder in any reasonable society.

If someone is threatening the lives of others as hostages, what degree of force is justified to stop them from taking those lives?

Not lethal. Lethal force is not necessary in any circumstance whatsoever.

I hope not, if the family of any criminal out there could get policemen jailed for doing their job, there soon won't be much policemen left.

A policeman's job is to enforce the law, not kill criminals. In this case that means arresting the bank robber so he can be brought to trial. If the bank robber comes out of the bank "guns blazing" then the police are certainly justified to shoot him as a matter of self-defense.

If, however, the bank robber steps out unarmed and is shot and killed, the family should have the right to bring a wrongful death suit (or something, IANAL) against the police officers in question.