Air carrier Captain reported the First Officer descended below terrain minimums on a Visual Approach so they took controls and initiated a go around.

Narrative

I operated Aircraft X from ZZZ1 to ZZZ and was the pilot monitoring for this leg. After a 3 hour flight to ZZZ; we were being vectored on a heading to the final approach fix for a visual to Runway XXL backed up with the ILS. We were at 2500 msl and 180 kts; flaps 2. I mentioned to the FO that he may consider; once cleared for the visual; widening out the base slightly to aid in capturing the glideslope or setting a lower altitude. We discussed there was traffic to the right and hesitancy to widen out the base leg by much. I also pointed out that the final approach fix was a fly over waypoint and that the plane would not conduct a smart turn but rather we should activate vectors to intercept otherwise the plane would fly through the final approach course. He agreed and I activated vectors. He called for flaps 3 and gear down as we were getting closer to the localizer course. As I was lowering the gear and pressing the flight attendants call button; Approach called to clear us for the Visual Approach and to contact Tower. I reached up to turn on the nose taxi light and when I looked back down; we were in a steep descent. I quickly scanned to ascertain the aircraft's state and noticed the altitude selector set to 1000 feet. Speed was around 150 but bugged to 170 and our descent rate was approximately 1900 fpm. To the best of my memory; the altitude was approximately 1800 msl. This all happened very quickly and I was a bit confused about the aircraft's state. I said something about the slow speed and high descent rate which was at the time perplexing. There was no immediate corrective action by the FO and not wanting to waste time figuring out 'why'; my hands instinctively went for the controls and I took command of the aircraft. I called out my controls and go around; TOGA. This occurred at approximately 1100 RA. As this was happening; and it felt as if it was all a blur; Approach called a Low Altitude Alert but I was already in progress with the go around. The radio was a bit busy so it took a few seconds to get an altitude and heading from approach. We cleaned up and was vectored back around for XXL where I landed the aircraft.During the debrief; we were both still confused about how this happened. I learned from the FO; who was flying at the time; that he was using TCS (Touch Control Steering). This helped explain why the speed was slow even though the autopilot and auto throttles were on. Also; the FO had set 1000 in the altitude window and selected FLCH (Flight Level Change) while I was talking to Approach and toggling switches on the overhead panel. I didn't notice FLCH in the chaos only that we were slower than bugged and descending too fast. I went into recovery mode. The last RA altitude that I remember seeing was approximately 1100 AGL but due the descent rate and attitude; I chose a TOGA go-around rather than soft go-around. The combination of the incorrect altitude setting of 1000 MSL instead of 1000 AFE; the use of FLCH; and use of TCS along with the radio call distraction resulted in this situation. Since this flight; we have had discussions about the dangers of FLCH; reliance on automation; use of TCS; and techniques to flying Visual Approaches.