I/m hoping you haven't abandoned this thread, for IMO your input makes sense and the subject is a real real problem for many people. It's not a big problem for me for I found faith when I was fathering children and simply brought them up to understand God is real, but sometimes allows suffering for the development of character.
Anyway be that as it may, my children grew up with little conflict in their mind as to what was fable and what was truth, and had little difficulty in separating pagan myths from truth also. When they asked the quations I (without disrespecting my parents or in laws) just told them the truth. Eg "this is a fairy story and was invented and written by a human being for the purpose of entertaining other human beings - especially children" They are all grown up now, and at ages between 15 to 18 they made their own decision, logically, for faith in God, and belief of His truths (ie His promises and prophesies had been proven to them and after many questions had been addressed they became believers. They are now in their forties and their children are headed in the same direction.
Perhaps what you are after is only an ideal that despite our fumbling only does work for a few - perhaps it only works for the believers in the one true God, for there is no conflict then.
I hope your children grow up with a strong love for their parents and their peers. Remember this - you have to demonstrate love and respect for your parents and in laws if you are to have any hope of receiving the same from your children. I can guarantee that they will, in part at least, follow your example - so set them a good one.