Gavra,
1) Chessed is very much part of the family business.
2) The rest I won’t comment on because it would mostly be nitpicking, but I think you missed my main point, that religious coercion is a convenient scapegoat but is hardly the actual culprit. Therefore, the choice between taking a more halachically lenient approach, and keeping your kids frum, is a false choice. You can have your (pas Yisroel/yoshon) cake and eat it too.
3) The OP was, possibly inadvertantly, talking about behavior which is outside of the Torah’s guidelines.
http://www.theyeshivaworld.com/coffeeroom/topic/perspective-from-otd?replies=85#post-496198