I believe that the Safari preferences setting "Open safe files" only deals with files actually DOWNLOADED to the computer, not stuff that isn't actually downloaded but that is supposed to open in a new Safari browser window.
I have never had "Open safe files" selected, not ever, and I've never had PDFs not open in a browser window unless some other something or other was causing the problem, in this case it was <AdobePDFViewerNPAPI.plugin>.
Removing that Plugin is what worked for me......
Since don't remember any version of Adobe Reader Application ever asking me to ‘accept terms’ when I've opened it (unless it was on the Adobe web site before I was allowed to download the software*) I can't say that it isn't also problematic.
*That makes the most sense to me