I've written before that I don't like the phrase "religious Jews." Now I have a better explanation for it, thanks to Rabbi Joseph Telushkin. I'm still looking for a better phrase if you have one!
Rabbi Telushkin sums up the situation very well in Hillel: If Not Now, When?:
...[I[f two Jews are speaking about a third, and one of them asks if the person being discussed is religious, the answer is invariably based on the person's level of ritual, not ethical, observance. "He keeps kosher, he keeps Shabbat; yes, he is religious," or "She doesn't keep kosher, she doesn't keep Shabbat; no, she's not religious." It is virtually inconceivable that you would overhear the following conversation:
"Is so-and-so religious?"
"How do you know?"
"Because he's very careful never to embarrass anyone, particularly in public. And he always judges other people favorably."
Conversations such as this simply don't happen. Religiosity today - and perhaps even during Hillel's time - is assessed on the basis of ritual observance. If a Jew is known not to observe Shabbat or kashrut, that individual is regarded as nonreligious, even if his or her ethical behavior is exemplary and is based on what the ethics of the Torah and Talmud demand of him. In such a case, people might say, "Unfortunately, he is not religious, but he's a wonderful person." On the other hand, if a person keeps Shabbat and kashrut, but violates, for example, Jewish laws on business ethics or, in violation of the Torah, speaks unfairly and inappropriately of others, it wouldn't occur to people to say that such a person is not religious. Rather, they might say, "He's religious, but unfortunately he's not ethical."
Food for thought.