There is still much unknown about the inner motivations of Soviet leaders preceding and during the Terror. The real answer to your question is we simply don't know what Stalin expected or intended. There are no smoking gun document where Stalin details his master plan to an associate or even hints at there existing one. The best we can do is make inferences based on the available documents and the development of the purges through the mid-30s and specifically in 1937 and 1938.

The other problem is that there really does not appear to be a clear path of Terror. The treatment of the NKVD leader prior to Ezhov, Genrikh Yagoda, is a good example. Yagoda was discredited publicly, but kept on at the NKVD, then removed from the NKVD but kept on the Central Committee. Then, suddenly, he was arrested as party leaders panicked about him being free "even one day." Bukharin also has a bizarre path from public denunciation to execution. He was denounced in 1936, and then publicly cleared. He was denounced again in late 1936 but spared by Stalin in a secret plenum. He was then arrested in February 1937, but not brought to trial until over a year later and more than six months after he began to confess to his 'crimes.' Contrast these bizarre stories with that of Tukhachevsky, the Soviet general arrested in June 1937 as a seminal event launching a summer of violence. Tukhachevsky was arrested secretly - away from his troops - and immediately tortured and beaten mercilessly until confessing. He was shot immediately after an expedited trial. Molotov later commented in his memoir of the necessity to treat Tukhachevsky, Yakir, Rykov, Zinoviev, and other possible 'fifth column' oppositionists mercilessly to prevent a worse situation in time of war. Why Tukhachevsky? It's not even known. Unlike Bukharin who openly disagreed with Stalin, the marshal remained loyal throughout. Tukhachevsky's removal initiated a period of major assaults on the Soviet officer corps, for which Ezhov was awarded the Order of Lenin in July, 1937. Most of these victims were merely discharged without arrest, but some thousands were arrested. This also inaugurated a period where anyone was a possible target of state vigilance, even those who remained loyal to the Moscow leadership since the beginning. In the months that followed, the Moscow leaders sent emissaries around to various regions to remove hundreds of regional party secretaries who Stalin and other leaders earnestly seemed to believe were traitors or could possibly be one day (like during a war).

Yet much remained outside of Stalin's grasp. Stalin and other central leaders encouraged terror in some ways, and further authorized lists of people to be executed, but also appear to have not had total control of the process. Actually, the entire country was a fertile bed for political violence prior to 1937 for various reasons. The center-periphery problems persisted as local party leaders did more or less whatever they wanted, and were kept in power through local political machines that used the local NKVD officials to enforce discipline. Moscow certainly did not like being a nominal authority for large numbers of regional party leaders. Others have pointed out that Stalin himself was less endangered politically by the continued existence of the 'Old Bolsheviks' as those lieutenants around him, and posited that they were equal or more significant actors in pushing for repression against guys like Zinoviev, Kamenev, Bukharin, Preobrazhensky, etc. Other historians have also noted that there were great social conflicts in broader sectors of the Soviet population - perhaps no place more than the factories. In these thousands of new factories, workers (especially those who were active in the Stakhanovite movement) frequently accused bosses or engineers of sabotage and wrecking when things went wrong. Stalin probably could not have fully understood the total consequences of the various decisions to purge the military, and regional party leaderships, though he and his closest lieutenants did not appear regretful as violence spread through the country.

I think in reality we have to face the fact that the so-called 'Terror' is a construct of the historian. There is no question that political violence considerably escalated in 1937 and 1938, but the character of the violence and the various actions of the central authorities, peripheral authorities, workers, and others do not conform to a single clear plan or motive. It is hard to pinpoint a single moment when Stalin 'initiated' the violence, in part because the spiraling violence of 1937 and 1938 were also products of longer term social developments, and complex and inscrutable political changes. A great deal of the violence was focused against the so-called 'nomenklatura' party secretaries in a fashion roughly consistent with Stalin and his coterie's general goals for political centralization in a fragmented and volatile country. There also may have been a fair amount of mistrust of the emergence of a 'bureaucracy' as a new ruling class, or at least enough agitation as such by various radicals through the 1930s to stir up greater rank-and-file support for repression.

In the end, while Stalin's responsibility is without question, his prescience to understand the forces he would help unleash is suspect. Moreover, the on-going historiographical and popular focus on the demonic, omnipotent dictator detracts from a broader and more nuanced understanding of Soviet society in the period. It remains a difficult fact to reconcile with the image of Stalin the merciless and bloodthirsty dictator that there was widespread support in Soviet society for terror, even among many of those who would ultimately fall victim to it! That narrative requires a greater appeal to the various social factors contributing to the emergence of significant political violence.

Kruschev, who was one of the great survivors of the purges, seemed to think that Stalin suffered from a combination of paranoia and paralysis. Once things were set in motion it seems that Kruschev felt that Stalin was not able to take action to stop them. One of his most famous examples is that Stalin knew full well that Hitler was planning on invading Russia but seemed paralyzed against taking even the simplest remedial actions. It seems that Stalin was easily overwhelmed and then retreated into a paranoid coccoon. To extrapolate, perhaps Stalin initiated the purges and then just left them to run their course. I read the Memoirs of Nikita Kruschev but cannot cite them now. One of the more interesting and brilliant minds in twentieth century politics.