Generally, Vajrayana practitioners refer to "Vajrayana Buddhism" among themselves or with other Buddhists. However, to the general public this term may have no meaningful associations in the mind, so "Tibetan" is the term often used to describe it. But while it might be accurate to say that all Tibetan Buddhism is essentially Vajrayana, it is not true that all Vajrayana Buddhism is Tibetan, and the most obvious example that comes to my mind is Shingon, which is Japanese.
If the term "Tibetan Buddhism" is being used to refer specifically to lineages which have survived and emerged through what is essentially a Tibetan tradition, even though this tradition is, from a strictly geographical standpoint found in Bhutan, Ladakh, Sikkim, and so forth (not to mention the fact that it is rooted in India and is really therefore an Indian tradition), I think "Tibetan" it is probably an accurate enough term, and would be inclusive of any historical developments prior to Nalanda.
However, your point is well made.
Profile Picture: "The Foaming Monk"
The Chinese characters are Fo (buddha) and Ming (bright). The image is of a student of Buddhism, who, imagining himself to be a monk, and not understanding the true meaning of the words takes the sound of the words literally. Likewise, People on web forums sometime seem to be foaming at the mouth. Original painting by P.Volker /used by permission.