Ed Driscoll has video and audio of the actual words here. Here's  wikipedia's summary of the Yusuf/Rushdie fatwah controversy.

And here's Salman Rushdie's own take, in a 2007 letter to the Telegraph, on what Yusuf meant:

Cat Stevens wanted me dead

However much Cat Stevens/Yusuf Islam may wish to rewrite his past, he was neither misunderstood nor misquoted over his views on the Khomeini fatwa against The Satanic Verses (Seven, April 29). In an article in The New York Times on May 22, 1989, Craig R Whitney reported Stevens/Islam saying on a British television programme "that rather than go to a demonstration to burn an effigy of the author Salman Rushdie, 'I would have hoped that it'd be the real thing'."

He added that "if Mr Rushdie turned up at his doorstep looking for help, 'I might ring somebody who might do more damage to him than he would like. I'd try to phone the Ayatollah Khomeini and tell him exactly where this man is'."

In a subsequent interview with The New York Times, Mr Whitney added, Stevens/Islam, who had seen a preview of the programme, said that he "stood by his comments".

Let's have no more rubbish about how "green" and innocent this man was.

Salman Rushdie, New York