Is it permissible to describe Islam as the "lowest" rank of religion, and what is the correct phrasing that should be used when teaching the ranks of religion?

You have not erred. The meaning of the rank of Islam being below the rank of Iman (faith) is that every believer is a Muslim, but the reverse is not true. A person can be a Muslim without being a believer, like the Bedouins concerning whom Allah Almighty said: "Say, 'You have not believed; but say, "We have submitted," for faith has not yet entered your hearts.'" These individuals had not fully achieved faith, so they were commanded to only claim Islam until they progressed in it and reached the rank of faith.