"Vague terror" is terror that has no clear cause; as such, it is all-encompassing.
Usually terror is directly caused by something. For example, someone might have a terror of heights, crowds, or spiders. In these situations, the source of one's terror is clear, and avoiding the trigger (heights, crowds, spiders) is generally easy to do.
If terror were to have a clear source, it could be easily defined (and therefore easily combatted). When terror is vague, however, it cannot be easily defined (and cannot be easily defeated). Therefore, "vague terror" is much worse.
Because is the correct answer. The word because is connecting the two statements together and explaining how they finished their work.
