Hotels in Europe don't "vet" passports. In some countries they may look at it, in others they can't. In France only police and some other fonctionnaries are entitled to control a passport - we will see if that changes. But technically that would be very hard to do and who would train staff for small hotels?
Airbnb can check passports, but they do not do it themselves, they give it to a private subcontractor. European data should not be sent overseas - it was possible under the safe harbor agreement but that got thrown out by the European court in October.
Even living in Paris, I still think it less likely to host a terrorist then some unsatisfied employe of a private company I know nothing about and did not choose takes my identity information and commits some kind of fraud with it or sells it for whatever purpose the buyer has in mind. Or they get hacked.
It's a global business now, you have to keep in mind that one country's reasonable security may be another country's nightmare of a police state.
As for hosting people living from fraud, that's usually not dangerous, if you are not the intended victim. I would be pretty annoyed about a drug dealer though. Drunk would be bad, but I'd probably go for a warning first and not throw him out on the spot. - I did not get that fully: did you mean that you threw him out drunk into the night? That seems quite dangerous to do and could result in liability if he comes to harm.
