I agree. That video is hilarious. It is delightful that Chesterton, whose political incorrectness was so thorough and multi-faceted, should have been captured on film saying something politically incorrect. But, then, the angels always did smile on him.

Is that really so? I am asking honestly. I've come across "Mohammedan", and even "Musselman", in older literature, and I don't recall them being used in perjorative or polemical senses.

According to the OED "Mohammedan" has been in use since the middle of the seventeenth century, and the dictionary cites a note (from 1992) that the word is "now" considered offensive. Presumably that "now" implies that it was formerly not so considered. The Merriam-Webster dictionary defines it as "of or relating to Mohammed or Islam", without labelling it offensive.

The Wikipedia page for the word -- and we know how infallible Wikipedia is -- notes that "Mohammedan" was widely used until the 1960s, citing Fowler's A Dictionary of Modern English Usage as an authority.

To a speaker in the 1930s, the word might well -- I don't know -- have meant something like "Papist", a crude word meant to demean. But it seems to me it might have been used more neutrally, as we use "Lutheran" or "Calvinist" -- that is, a Mohammedan need not be thought to worship, but only to follow the special teachings of, Mohammed.

I think that whatever offensiveness there was in Chesterton's comment resides not so much in his particular choice of words ("Mohammedan" vs. "Muslim"), but in the idea he expressed. Even if he had said, "I am not much of a Crusader, but at least I am not a Muslim", the offensiveness is hardly reduced.

I agree with Mac that he is being self-deprecating, playing on the name of the Holy Cross Crusaders who are honouring him. Still, news coverage of the event, if it had happened today, would ignore all that and probably read, "Chesterton Slams Muslims! -- Says Not One of Them".

Medieval Christians mistakenly believed that Muslims worshiped Muhammed, the way they (we) worship Christ. The term is at best a misnomer, and is offensive to Muslims, which is reason enough not to use it.
Chesterton, of course, was using the accepted terminology of his times, and at any rate was intending only his usual humor, not a serious commentary on Islam; not that he would necessarily have transcended his times if he had...
No matter, even a good and wise man like GKC is a man of his times, as we are of ours.