In the Name of Allah, Most Gracious, Most Merciful.
All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.
Dear questioner, we would like to thank you for the great confidence you place in us, and we implore Allah Almighty to help us serve His cause and render our work for His Sake. May Allah reward you abundantly for your interest in knowing the teachings of Islam!
Expressing the exalted rank of Prophet Muhammad (peace and blessings be upon him) doesn’t mean that we Muslims belittle other Prophets (peace and blessings be upon them). On the contrary, Muslims hold all Prophets and Messengers of Allah in high esteem. This stance is inspired and guided by the way these Prophets were mentioned in the Qur’an. In fact, these men deserves all respect and honor due to the great sacrifices they offered to guide people to the straight path and save them from deviation and going astray.
As for the points raised in your question, we'd like to cite for you the following fatwa issued by Sheikh M. S. Al-Munajjid, a prominent Saudi Islamic lecturer and author, in this regard:
All people were created by Allah to be His servants; His is the Power and Command from eternity to eternity. Out of His Divine Wisdom, He selected some of His angels and preferred them over others, such as Jibril, Mika’il, Israfil, etc. And His wisdom and justice entailed that He Almighty select some of the children of Adam and prefer some of them over others. Allah says: (Allah chooses Messengers from angels and from men. Verily, Allah is All-Hearer, All-Seer) (Al-Hajj 22:75) He also says: (Of those messengers, some of whom We have caused to excel others, and of whom there are some unto whom Allah spoke, while some of them He exalted (above others) in degree) (Al-Baqarah 2: 253) Allah tells us that He chose and selected these Messengers from among mankind. He mentioned some of the Prophets and Messengers and then said, (And also some of their fathers and their progeny and their brethren, We chose them, and We guided them to the Straight Path. ) (Al-An`am 6: 87)
Out of His Wisdom He made Adam (peace and blessings be upon him) the father of mankind, and His Wisdom, Mercy and Justice entailed that from among Adam’s progeny He selected an elite of Messengers and Prophets (peace and blessings be upon them and upon our Prophet). Among those chosen and preferred over others were the Messengers of strong will (Ulu-l-`Azm (see: The Qur’an, Al-Ahqaf: 35), namely, Muhammad, Ibrahim, Nuh, Musa and `Isa ibn Maryam (peace and blessings be upon them all). And He chose and favored above them all their leader, the final Messenger, our Prophet Muhammad (peace and blessings be upon him). He is indeed the eminent of all the sons of Adam, with no boast. He will carry the banner and will be granted the power of intercession on the Day of Resurrection.
The Prophet (peace and blessings be upon him) is the one who will attain Al-Maqam Al-Mahmud (the Praised Position in the Hereafter) in Paradise, which will be given to one person only, and that person will be our Prophet (peace and blessings be upon him). Allah took the covenant and pledge from all the Prophets that if Muhammad (peace and blessings be upon him) was sent during the lifetime of any one of them, they would be obliged to follow him, to leave behind what they had brought and follow what our Prophet (peace and blessings be upon him) brought. As Allah says: (When Allah made (His) covenant with the prophets, (He said): Behold that which I have given you of the Scripture and knowledge. And afterward there will come unto you a messenger, confirming that which ye possess. Ye shall believe in him and ye shall help him. He said: Do ye agree, and will ye take up My burden (which I lay upon you) in this (matter)? They answered: We agree. He said: Then bear ye witness. I will be a witness with you. Then whosoever after this shall turn away: they will be miscreants. ) (Al `Imran 3: 81-82)
The Prophet (peace and blessings be upon him) said to `Umar ibn Al-Khattab (may Allah be pleased with him): "By Allah, if my brother Musa were alive, he would have no choice but to follow me." When `Isa ibn Maryam (peace and blessings be upon him) comes down at the end of time, he will come to rule in accordance with the Shari`ah of Islam, and follow the teachings of Prophet Muhammad (peace and blessings be upon him).
All of the above concerns their status before Allah. With regard to their religion, it is one religion, for they all called people to believe in One God, Allah (Tawhid) and to devote worship sincerely to Him Alone. With regard to laws, each of them had his own law, which was for his people alone. Allah says: (To each among you, We have prescribed a law and a clear way. ) (Al-Ma’idah 5: 48)
But the Shari`ah of our Prophet Muhammad (peace and blessings be upon him) is the most perfect, the best, the most complete; it abrogates all laws that came before it. Undoubtedly, the Prophets differ in status, and they are at varying levels. The best of them, as stated above, are the five Messengers of strong will (Ulu-l-`Azm), and the best of them all is the Seal of the Prophets, Muhammad (peace and blessings be upon him).
With regard to the sound hadiths, "Do not prefer me over Yunus ibn Matta" and "By the One Who chose Musa over all of creation", these all indicate the immense humility of the Prophet (peace and blessings be upon him) when speaking of his brothers, the Messengers. But he is undoubtedly the best of them all, for he led them in Prayer in Bayt Al-Maqdis (Jerusalem) on the night of the Israa’. He will be the leader of the sons of Adam on the Day of Resurrection, and he is the only one among all the Messengers who will be granted the power of intercession on that Day. The Prophet (peace and blessings be upon him) is the one who said: “From among the sons of Adam, Allah chose Quraysh; from among Quraysh He chose Kinanah; from among Kinanah He chose Bani Hashim; and from among Bani Hashim He chose me.” So, the Prophet (peace and blessings be upon him) is the Chosen One (Al-Mustafa) from among all of mankind.
Excerpted, with some modifications, from: www.islam-qa.com
So, what Muslims do as regard Prophet Muhammad is not a form of exaggeration or discrimination against other Prophets, for, as we’ve said, this runs counter to Islamic teachings. The Prophet himself said, as narrated by `Umar, “Do not exaggerate in praising me as the Christians praised the son of Maryam, for I am only a Servant. So, call me the Servant of Allah and His Messenger.” (Reported by Al-Bukhari)
What Muslims do rather is showing respect and honor to a great person whom Almighty Allah Himself accorded honor and prestige, as He said in the Qur’an: (Lo! Allah and His angels shower blessings on the Prophet. O ye who believe! Ask blessings on him and salute him with a worthy salutation.) (Al-Ahzab 33: 56)