The problem, as stated, seems to me like it can be solved by precommitting not to negotiate with terrorists--this seems like a textbook case.

So switch it to Pascal's Philanthropist, who says "I offer you a choice: either you may take this $5 bill in my hand, or I will use my magic powers outside the universe to grant you 3^^^^3 units of utility."

But I'm actually not intuitively bothered by the thought of refusing the $5 in that case. It's an eccentric thing to do, but it may be rational. Can anybody give me a formulation of the problem where taking the magic powers claim seriously is obviously crazy?