fix-it-up — “it’s “bad” raising kids in Israel” seems like a very simplistic perspective of a very complex issue. What does “bad” mean exactly? IMHO it’s “bad” raising kids anywhere — it is one of the biggest challenges in life (part of Chava’s curse, after all) wherever you live, and obviously a tremendous source of satisfaction.
As you yourself seem to realize, each location comes with its own set of challenges. The issues you will have to contend with will vary from place to place. Some basic differences have been mentioned by previous posters.
To just address the E”Y part of the question, perhaps what the person quoted meant to say it that it is difficult to raise kids in an environment where your home culture is different than the school culture. This is particularly true if you move once your kids are already somewhat older. As SJS said, society in Israel tends to be more extreme in many ways, and have more rigid societal norms. Additionally the culture is more “rough and tumble”, particularly by the boys, and American kids used to a much softer tone may have trouble with it. Finally, kids in E”Y tend to have much more freedom at a much younger age, which has benefits but also dangers that a parent must contend with. As an American (I’m assuming you are American as you are comparing it to Lakewood), these may be challenges you would face in E”Y.
That being said, things are not what they used to be in E”Y in many of these regards. There are certainly areas in E”Y where there are larger percentages of Anglo families and therefore the societies are more open-minded. (Again, there are advantages and disadvantages to living in these type of areas, but if you are concerned with some of these Chinuch issues, the options exist.) There are also school options even within the Chareidi world that are more “American style” (and even allow ball playing!)
Of course there are tremendous advantages to raising kids in E”Y as well as the challenges. The less of a focus on materialism is just the tip of the iceberg. It’s not easy anywhere — raising kids is hard work and a lot of tefilah, but there is a lot of “good” together with the “bad.”
And of course, (this probably should have been first), living in E”Y is a Mitzvah D’oraisah! So this is really a topic that should be discussed with your Posek, as far as what your personal chiyuvim with regard to this mitzva are, in your personal circumstances.