The Creator has taught us in the Qur'an and Sunnah that all other `religions' and ways of life are unacceptable to Him if a person is aware of Islam. The Qur'an states (translation),
[3:85] And whoever desires a religion other than Islam, it shall not be accepted from him, and in the hereafter he shall be one of the losers.
However, even though the Creator has clearly specified that no other way of life is acceptable to Him except Islam (i.e. submission to Him as embodied in the Qur'an and Sunnah), He has also commanded the Muslims to be tolerant of people who espouse other creeds. From the Sunnah, specifically in the study of the Sunnah called Al-Awsat by Al-Tabarani, we find regarding those non-Muslims living in the Islamic state,
The Messenger of Allah (saas) said, "One who kills a non-Muslim person under protection (Arabic: dhimmi) will not even smell the fragrance of Paradise."
Also from the Sunnah, specifically in a report from Al-Khatib, we find that the Messenger of Allah (saas) also said:
Whoever hurts a non-Muslim person under protection, I am his adversary, and I shall be an adversary to him on the Day of Resurrection.
In short, Islam is intolerant of false ideas, however it is tolerant of the people who hold to those ideas. One historical example of Muslims living up to the standard of Islam can be found from the time of the Spanish Inquisition. During that disaster sprung by misguided Catholics, some Spanish Jews fled to Muslim Turkey and to this day, there is a community of Spanish-speaking Jews in Turkey. Another example may be found during one of the Crusader invasions from Western Europe. Some of the the Catholic Western European knights were so likely to rape, murder, and pillage the Jews and Orthodox Christians, that when the Muslims won, they were treated as a liberating force by those non-Muslims.