So you say he was terrorist. He was born and bred in Bosnia, and in Bosnia, he killed the head of the state who invaded Bosnia. Does that mean that Partisans were also terrorist because they fought Germans in Bosnia from 1941-45?
It's tough for us Croats ( especially for you guys living over there) to fully adjust to a western democracy. You haven't really experienced one in the past ( 50 years of communism, and before that corrupt foreign monarchies, and now a rough transition into a free market for which no one was really prepared). Countries that work as western democracies have an established history of western liberalism ( I mean classical liberalism, not modern socialist-leaning liberalism). In theory the EU is supposed to help with the transition but there is quite the power disparity ( at least economically) between industrial powerhouses like Germany and tiny post war Croatia, to expect to be treated as equals is a bit naive.
The main connection that Croats have to the West is the Roman Catholic faith. Being RCs meant that we were always in the orbit of the West even if not fully part of it at times. We have a history of being interlocked with countries that were western or western leaning ( Austria and Hungary in the past) the same is true for Slovenes but not so much for our eastern and southern neighbors. But the West these days isn't connected through the churches anymore. The division started with the Protestant reformation in western Europe and continues via modern liberalism which is mildly hostile to Christianity( especially traditional Christianity like the Roman Catholic Church) and discourages it promoting a more secular society.
As for the answer to the main question I'd say Croatia is somewhere in between what is considered western or central European culture and "Balkan" culture. Our mentality is still largely "Balkan" as Croats are generally not as liberal as Slovenes but there is a noticeable effort to refine the "Balkaness" , smooth out the edges, and within Croatian culture there is an appreciation for the West not seen in most other "Balkan" cultures. Western liberal Europeans will always look at us with suspicion as if we have a temper that can ignite at anytime while Balkan neighbors will look at us with caution and curiosity wondering if we are really 'part of the family.' Strange place to be, in the middle.
Also, if you simply drive through Croatia and some of the countries surrounding it you'll almost immediately notice a difference between Croatia and our Balkan neighbors in terms of sophisticated infrastructure and cleanliness. ( especially if you compare Bosnia to Croatia)