It makes no sense to settle, and I think that word should be avoided also. A settlement is a formal term for something else, they just want you to pursue a civil remedy and not a legal one. But even with a guilty verdict in the civil trial they don't have to pay you a thing. With the minimum restitution forced upon the defendant in a criminal proceeding you'd at least walk away with some money. But if it's up to you if that restitution is worth time away from your work and your life. And if the dollar amount you're expecting to cover your loss is beyond his reasonable scope to pay you, maybe it's not worth it. But yes, by all means use the force of law to get your money, but it's not like YOU gave him hard time, he made his choices.

If he did indeed slam you twice with his vehicle as per your description, you owe it to society to use every measure afforded to you to ensure he doesn't do this to the next Muslim he sees, or anyone else. I somewhat doubt the exact details of the story to begin with, since it seems the switchblade was somehow a clincher to get him in cuffs, since he was already suspected for performing a hit & run, destruction of property, deadly conduct, If you fear reciprocation, let the authorities know that, and maybe move. But doing nothing doesn't guarantee that they'll leave you alone in the future, not in the slightest.

And in the end you present options that are not the only options by a long shot. Legally, as well as outside the box. You could call your local news about your experience and explain how you did nothing wrong but this crazy family and local police aren't helping you.