On mandated bigotry: "Believers, take neither Jews nor Christians for your friends." (Surah 5:51)
On a double standard toward unbelievers: "Muhammad is God's apostle. Those who follow him are ruthless to the unbelievers but merciful to one another." (Surah 48:29)
On mandated jihad: "O ye who believe! What is the matter with you, that when you are asked to go forth in the Cause of Allah, ye cling heavily to the earth? Do ye prefer the life of this world to the Hereafter? But little is the comfort of this life, as compared with the Hereafter. If you do not fight, he will punish you severely, and put others in your place." (Surah 9:38-39)
"Prophet make war on the unbelievers and the hypocrites and deal rigorously with them. Hell shall be their home." (Surah 9:73)
On the nature of treaties: "If you fear treachery from any of your allies, you may fairly retaliate by breaking off your treaty with them." (Surah 9:12)
Thus, to say that any Muslim is a "moderate" denies that they read and believe the above quotes. They could deny it to you and have no problem lying about it either.
Now, as to whether Islam is a theocratic system, you have only to note that the Caliphate ruled on both political and theocratic matters in unbroken succession from the death of Muhammed until 1923. All Sharia law really is stems from use of the Qur'an as a Constitution.
How many Muslims would admit to that?
So, you see, it doesn't matter if there are Muslims who are "moderate," because the book they worship states the more fundamentalist line in no uncertain terms. That means when push comes to shove, the fundamentalists rule and the "moderates" do their bidding or face the consequences.
As to "proof," you set yourself up as judge and jury. I don't give a hang if you don't avail yourself of common sources, such as the Qur'an itself (if you could stomach it).
If you're going to cherry-pick, there's plenty of things in the Bible that are anathema to our modern society, including the old punishments for some crimes. Stoning for adultery and all that.
If we were to judge Judaism solely on those few words, it would seem incompatible with our nation. But we don't. That would be silly. People don't take such things as literal proscriptions any more.
I do not disagree that fundies are the Muslim majority. But there are also moderates. I wish they would raise their voices sometimes, but there are moderates. It's not so black and white as you might like to believe.
It is possible for one to be a Muslim without automatically advocating the violent overthrow of the United States. Therefore the faith itself cannot be illegal, only certain practices within the faith, same as LDS.
We don't have to love it, but we cannot outlaw it. We cannot remove First Amendment protection of it just because we don't like it, which is what we were talking about in the first place.