There is a hadith (and I am paraphrasing here so Allah (SWT) forgive me) that talks about an instance when the Prophet (SAW) was at a festivity and giving gifts out to all but one person. He was questioned as to why he never gave a gift to this one individual who was perceived by the person asking to be a pious believer (muminoon) and the Prophet responded that he was Muslim. This continued again until the Prophet pointed out that the other man saw his actions and not his Iman, and thus was not at a place where he could make a comment about his faith.
It is interesting that here was someone thinking something positive about another and he was warned against it, but it goes to show something powerful. We do not know a person's heart. For this reason we are never to speak ill against another believer. We can point out an action that we know to be wrong in the religion (following the gentle method of the Prophet (SAW)) but in the end we do not know the person's heart. Whether we believe them to be weak in faith and character or strong in faith and character, that is not our decision to make or place to articulate. Because in the end when we stand before Allah (SWT) only He will be our judge. Who knows the khusu that other individual has in prayer, maybe it far exceeds our own, or the dhikr they make-- amazing examples of remembrance of Allah (SWT) that we could never know about when we look at the individual. Or there could be someone we praise while all the while they are swimming in sin.
We need to remember to try and emulate the Prophet (SAW) and be a model for others, but in the end, judgement is with Allah. I also think that there is a difference between undue praise and encouraging a fellow believer. For instance, telling someone who is striving to change a habit or better themselves that you notice their efforts with the intention of trying to motivate them to continue is different than over exaggerating what they are doing. As we know, deeds are measured by intention.
Alhamdulillah we Muslims are united by an amazing faith and we need to do our best to keep each other strong--
"And hold fast all together by the rope which Allah (stretches out for you), and be not divided among yourselves; and remember with gratitude Allah's favor on you..." 3:103