That definition is derogatory, a catch all terminology invented by judeo-christian stereotyping. By definition it's basically saying your pagan are f your gods are minor, unimportant, ect. And we could basically use it to cover Egyptian, greek, roman, ect.
So your point isn't that the term pagan is incorrect, but that it's offensive?
The term pagan
was invented by Christians to describe non-Christians. It
was used in a derogatory manner. Pagan means basically the same thing as peasant, hick, villain, etc. At some point it came to mean "not monotheistic," but retains many of the other meanings.