bruce_schneier posted an update on that watch list yesterday, but I, having worn myself out by pushing myself too far too early in recuperation, didn't update my own. Rather than repeat and introduce whisper-effect, I'm just going to point back to his updated post.
Capsule summary: The ACLU somewhat overstated matters. While there are over a million entries in the list, many are aliases or variant spellings, and the list actually represents some 400,000 individuals, only 5% of whom are US citizens or otherwise have a legal right to be in the US.
However, as Bruce also observes, a watch list of 400,000 "terrorist suspects" is still absurd. It's still the equivalent of one in every 750 people in the US being a terrorist.
no subject
But you make an excellent example: In the event of some Unpleasant Event, you're definitely on my list of the top five people I know that I'd want watching my back. The idea of you being a potential terrorist is, to me, absurd. But just because of your last name, the system considers you a Suspicious Person, and you're probably going to keep right on being a false positive.