That's the problem. The Marine corp currently has MCMAP, which is superior to IDF's KM, but suffers from similar flaws, in that it lacks full contact competition. It's basically just traditional martial arts training adapted for the Marines.
When I was in the Army, we had traditional combatives training, which was basically the WW2 era hand-to-hand stuff developed by Fairbairn(if I recall correctly), which was better than nothing, but not adequate training for those without any actual fight experience. Thankfully, at the time, the Army had an active Boxing program, with regular competition. I'm aware that now the Army trains MMA based on BJJ and MT, and encourages soldiers to participate in competition, which I believe is a major improvement over its old unarmed combat training...not that those techniques didn't work, but they were never going to work as well for those without experience in striking and grappling sports, lacking the motor skills and muscle memory to make those techniques work.
That sums up my opinion of the IDF's KM; it's not that the techniques are useless, but that teaching those techniques to soldiers who lack a foundation of striking/grappling sports experience is useless. You'll end up with soldiers like the one's you describe, who are overconfident and underskilled.
The reason MT and BJJ have become so popular, on the other hand, is that they are arguably the best combination of grappling and striking skills to have in clinch fighting and ground fighting, which efficiently covers probably 80% of one-on-one encounters. It's a good foundation.
Having said that, there are many instances in which a fighter should avoid going to the ground as if his life depended on it, and should similarly avoid the clinch, but those apply less to one-on-one sport competition, in which the opponents are somewhat equally matched.