A federal appeals court has reinstated a lawsuit that claims the NYPD's spying on Muslims violated their civil rights. The decision might seem like another nail in the coffin of former Commissioner Ray Kelly's terrorism-fighting legacy.

But is it?

While department officials say privately that the spying was more hype than substance, the NYPD is defending the surveillance -- at least in this case. "There's been no finding by the court that the NYPD did anything wrong or anything illegal," said Lawrence Byrne, deputy commissioner for legal matters.

But the appeals court decided the plaintiffs have sufficient claims of religious-freedom and equal-protection violations. And in reinstating the suit, it overturned a bizarre decision by U.S. District Court Judge William Martini, who had ruled the spying did not violate Muslims' civil rights.

In his recent book, Kelly writes that the NYPD's surveillance -- which included hundreds of mosques, schools, businesses, student groups, non-governmental groups and individuals -- foiled 16 plots against NYC.

A closer read of Kelly's plot descriptions tells a different story, though. A number of the plotters appear to have been egged on by NYPD agents and informants. An NYPD informant was paid $100,000 in a plot to bomb the subway near Herald Square. And in a plot to attack Bronx synagogues, another was paid $250,000 by the FBI.

"They may have stopped six plots, but they started 10 others," a senior NYPD official said last week.

Although Bratton disbanded the spying unit, the NYPD kept most of Kelly's policies, such as posting detectives to overseas hot spots. The NYPD also has expanded intelligence and counter-terrorism units.

Recently, for example, the NYPD learned of two alleged plots involving nine or 10 people. One involved a threat to behead Pamela Geller, a commentator known for some controversial views on Islam. A second was to explode a pressure-cooker bomb at a July Fourth celebration. The NYPD did not call a news conference to announce it had foiled the plots. Instead, it issued a news release.

"They don't have to publicly justify what they are doing the way Kelly did by saying he is saving the world," a former NYPD official said. "The whole thing about intelligence is keeping it clandestine."