I think the word Muslims mean either a culture or a religion. Muslims are just a kind of people. Not all Muslims are bad, for example the people in the Alliance are not our enemy. The word Alliance means unity and friendship.
God is known in Arabic as Allah to distinguish him from ilah, which could refer to any of the Gods once worshiped in Arabia. Just as one might say in English that the French or Germans worships Gods, not Dieu or Gott, so one should say that Muslims worship God, not Allah, which is simply the word for God (with a capitol G) in the Arabic Language.