To reiterate:
Life is unsafe. Live with it. The security methods that are actually effective (such as proper police and intelligence work to identify threats before they actually manifest, or simply reinforcing and locking cockpit doors) are usually the least intrusive, while those that are most visible and intrusive typically do the least to increase security and often end up actually decreasing it (all that attention the TSA screeners are spending confiscating liquids and nail clippers is attention not being spent watching for actual threats).
Terrorism is rare. Really rare. Terrorism on airplanes even rarer. Since 1980 3,268 Americans were killed in terrorist attacks on airplanes (2,992 of those were from 9/11). For a comparison ~2100 people were struck by lightning over that same 30 years. For another comparison ~40,000 people are killed in automobile accidents each year in the US. Think about security a little more rationally before being so willing to inconvenience yourself and others for what actually amounts to no meaningful increase in security.

There is no such thing as common sense anymore. Common sense was getting in the way of the fear-mongering business of fox networks and such, so it had to go. Don't let some annoying common sense get in the way of profitable news headlines.

While I don't feel a need to put it as "eloquently" as you, I am going to sum things up:
Sometimes, people want to FEEL safe.
I know, it is a hard concept to get around. Sometimes, people actually want to feel like someone is giving a crap about them. We all complain about how intrusive things are and how our privacy is being invaded. But, at the same time, it makes us feel safer (until we remember that Homeland Security are idiots :p).
To stop plane hijacking, reinforced cockpit doors and those air marshal guys are probably more than enough (I would mention no-fly lists, but it seems as though the only way you can be caught on that is if you are NOT a person of interest). But, by definition, those are non-intrusive (unless you get the idiot who feels the need to show off his gun). So that won't really do anything for the people who actually have concerns. Sometimes, the stuff that isn't actually a huge improvement on security (although, still helpful), can do the most to make the people flying feel safer.
Now, did turning the plane around actually increase security? Probably not. Did it decrease it? Not at all. But, if something HAD happened, it would have been on the heads of the airline, it would lead to even more security concerns, and it would cause even more discomfort for the people flying. They would wonder "Wait, so if a guy actually turns himself in, they STILL won't do anything?". And before you say "people wouldn't think that", look at the BVDs-bomber. Anyone who has listened to the news at all is still wondering why he was allowed to fly after his own father reported him.
Are a lot of the things in place irrational? Arguable (I think it is more the people enforcing them who tend to get irrational). But that is because most people's fears are irrational. "The Bad Guys" aren't stupid. They know that the same trick won't work twice (unless Jimmy Carter is in office :p), but we still freak out about box cutters and pocket knives. Why? Well, aside from the fact that we probably should have in the first place, it makes people feel safe.
But what happened here? Not irrational at all. Because I am sure that if you just check the handbook for security and the like, this was exactly what procedure was. And because the guy inconvenienced the crap out of everyone and made a scene, he is getting fined. Simple as that.

I don't really feel any safer now. Not only do I have to worry about terrorist threats, but I also need to watch out for the authorities; they're locking up innocent people while they should be protecting us from real dangers. They're completely irrational, who knows what they'll do next?!

My dad has a friend who essentially got blacklisted from Delta Airlines for exclaiming "Jesus Christ" to a receptionist (maybe I should also mention his wife and two small children were with him). This was a year or two ago. It's always been insane and will continue to be insane.

And wouldn't that also open up a huge weakness for anyone to take advantage of and endanger America? I mean focus too much on one area and ignoring openings. Ether way, Panic is a great way to screw up. I mean, when I was in public school, they didn't say run and scream when a fire drill happened. they said the opposite and to close windows shut doors grab your coats and stick together.
My mom and her husband work at the airport and they don't care how overzealous security is. I honestly don't feel safe when there is a lots of security up, in fact it's the opposite. Especially if security is going after civilians too and if security was not meant to originally be there. Active searching security sends the feeling of danger is around currently while calm, relaxed security makes me feel safe as no danger is currently around.

You should check out the news in Malaysia for the last few days.
The usage of a single word by Catholic churches in the East Malaysia caused churches in West Malaysia to be torched irregardless whether they were Catholics or Protestants.
So far, the police couldn't do nothing BUT they were pretty active during the peaceful protest against corruption. They even call in firetrucks carrying chemical laced water.
Truly a land of stupidity.

Well, this wasn't a case of panic. I mean, I doubt that the people who saw the fighter jets were too happy (if anyone did). This was calmly following protocol and turning the plane around. If they had shot the guy or dogpiled him, that would be panic.
And I too actually feel safer when I don't see lots of security guards and the like. But here is the problem:
We had jack all for security before 9/11, so people complained. So they went a bit overboard (which made people feel safe). Now it is over 8 years later, and we still are a bit overboard. But at this point, what can we really do? If we scale back security, people will scream and blame budgets and the like (and then, god forbid we get another BVDs-bomber).
It sucks, but that is the price of having free press. Well, our press isn't even really that free anymore, but that is a different political discussion :p
As for the problem with focusing on air travel (instead of boat and train, or even people driving over the border...): Yeah, that is a huge problem. But unfortunately, the only way to get change is to have something bad happen.

Very true that the authorities are causing more damage than the terrorists in situations like this. Police are edgier nowadays around arabic people even though many were born in America. Airlines we all just read are required to overreact but this is wasting resources on something that won't happen anymore. The terrorists are winning at this pace, because while we're scared and watching for a punch they might just give us a kick that hurts worse when we aren't watching for it.
We need to actually fix the problem instead of reacting to it. But in the classic American way we won't directly fix problems. I am not claiming we go to full scale war on all Arabic states, but I think we need to scale up the war on terrorists as their resources are going to run dry eventually. We're sending in token forces that are enough to hold off the problem but not fix it quick.
To sum it up, when we get threatened what do we do? We strip-search people. That's not a great answer.

Security actually wasn't all that bad before 9/11; the largest problem was that people were trained to just sit quietly in the event of a hijacking, an issue that was rectified before the attacks were even finished (UA Flight 93). Perhaps some people felt a little safer within a couple of months following 9/11 due to the security theater (although even that is questionable), but it didn't take very long for all the security theater to turn from possibly alleviating people's fears to perpetuating the culture of fear (people have short memories and are actually fairly resilient, unless they're given constant reminders telling them they should be afraid). As for what we can do, while scaling back security theater may cause an outcry for a couple of months from certain pundits, as the months pass, we still see no successful attacks, and people are no longer constantly being told that they're in danger, the culture of fear will quickly fade and without that there simply won't be any significant amount of people wanting feel-good security measures. At the same time, some of the resources currently being devoted to security theater can be devoted to actual security so we even end up safer from the whole process.
"What can we do?" should be spoken as an actual question, not a statement of resignation. Stop being afraid. Stop being afraid of attacks. Stop being afraid of public sentiment. Stop being afraid of all the paralyzing "what-if"s bouncing around in the back of your mind. Consider situations rationally rather than letting your fear lead you, or if you're incapable of doing that then at least get out of the way of the people who are capable of it.
The terrorist tactics currently being used are proving highly effective, but what you propose will only make the problem even worse. Terrorism is not a true military tactic, it is a psychological and economic tactic. By visibly targeting the civilian populace terrorism gives the impression of a threat far larger than what actually exists, and the fear from this in turn leads to an overreaction that expends far more resources trying to fight the "threat" than the threat actually deserves. Terrorism is only effective if the response to it causes far more damage to the target country than the terrorist attack itself (which might as well be a mosquito bite as far as any nation is concerned both in terms of lives lost and economic damage). The most important resource for terrorists is personnel willing to carry out the attacks, and large military responses only increase the pool of potential recruits. An effective response to terrorism needs to be primarily political, psychological, and economic, not a military response.
Also, consider the most recent attempted attack. It was utterly unsuccessful in terms of causing deaths or direct economic damage, yet politicians across the world are ready to spend billions on measures that wouldn't even have been effective against the last attack, to say nothing of the next attack. Why do you think the bomber spent 20-30 minutes getting ready in the restroom, just to go back to his seat to actually ignite the explosives (where he was easily caught and subdued when detonation failed)? If he had just burned his balls off in the restroom and made up some excuse so he could get away then absolutely nothing would have come of the attempted attack. But attempting the detonation in front of all the passengers, even though the attack was a failure from a military perspective it was incredibly successful from a psychological and economic standpoint.

That's where I was a few years back. After watching a video of terrorists 'smiting' the neck of an engineer of in Iraq I was afraid for months to the point of my waiting for them to come through my window and get me. I knew they wouldn't but it just sat in my head for a while. That is fear. Fear is irrational. Nowadays, after a few break-in attempts of our property I scared off with my pistol, I am not afraid. I simply get the pistol off my nightstand or my shotgun by my bed and defend myself.
What my story is saying is I agree with Phoenix that fear is not needed. Fear will be around, but until people deal with it fear will keep gripping us as long as the media is stirring the crowd up with that kind of stuff. Perpetuating fear is all that is happening today, we don't even have a good reason to be afraid. I lived in fear, it gets nothing done and wastes time. Get it together and live your lives, don't let little notes or jokes ruin a flight or certain words send chills up your spine. Terrorists know that if you jack a flight you will die. Hijacking a plane never succeeds after the 80's because we now know how to stop it.