No Islam does not direct women to get circumcized.
Actually, the Hadīth you have referred to has been translated literally, and
thereby given rise to the question of female circumcision. If linguistic
principles are given due considerations, the Arabic word Khitan used in the
Hadīth and translated as ‘the circumcised part’ actually implies the copulative
male and female organs.
In the Arabic language, there is a style called Mujānasah
which means using similar words such that the second used word does not do the
job of conveying its original meaning but rather being of the same genre as the
previous one. We have examples of such usage in the Qur’ān also. For example a
The recompense of evil is similar evil. (42:40)
Here the word evil used second is merely for Mujānasah ie
it does not do convey its original meaning; it is only of the same genre. Of
course, the reward of evil is not a similar evil for the reward is a just act
which the perpetrator of evil deserves; this act of justice cannot be called
evil in the literal sense.