Salam,
A Kafir (rejector) is usually used in opposition to Believer (Moumin). It is someone who willfully turns away or behaves in direct opposition to God?s instructions.
The Quran uses this term abundantly, and links it to specific behaviors (e.g. those who say trinity or Jesus is God are Kafirs according to 5:72-73). So, to answer your question: yes, we can equate some people with this term based on their behaviors - but the label carries no laws in this life nor is there any difference in dealing with them as human beings (all are to be treated equitably).
On the second point: ?Islam.? Indeed, God has given us the best and most perfect system and named it ?Islam/Submission?. Any other system can be used, but it would not be following the path of God (e.g. the US system included slavery at some point, interest on money, preemptive wars, and more recently gay marriages - all of which are in opposition to God?s system and would create a problem for its active adherents on the Day of Judgement).