Others have already made some very good points about Jace's extreme military jingoism so I won't repeat those, but I do have something else (even if it is minor) to add: Muslims are a religion, not an ethnicity. It seems like a minor detail but he's made this distinction before. For one example, the foreshadowed love interest in Tiberius Rising, Aaliyah, is portrayed as an innocent good character, and while Arabic, she is strongly opposed to extremist Islam and is therefore a good person. Further he gave the examples of Arabic Christians in Iraq and Syria etc. being oppressed victims of ISIS and said he felt sorry for them and gave his support. Of course, Arabs are statistically more likely to be Muslim in Jace's mind, but even he acknowledges that Muslim does not equal Arab.
TL;DR: It's religious prejudice, not racial prejudice.