If it's insane to raise children in different religions, and I believe it is, why then is it alright if God raises his children in thousands of different denominations, sects, etc.?
Because the leaders of religions are no different than the worst politicians. At the core, the religions' leadership crave power and the ability to persuade no different than any politician.
It is only because the allusion of G-d's approval do these people get away with it.
My GF does matrimonial law. She says many Jewish couple treat each other worse than animals in the wild do. The same for other "straight" marriages in that sense.
The bottom line is that morality and spirituality, not the particular denomination, is what should be emphasized.
What I also find is that many people for some reason suspend all common sense and rationality when issues of religion come into play. Its actually amazing to see otherwise smart people believe the most ridiculous things just because the man in robes says so.
He doesn't. There is only one body of Christ. Denominations, sects, etc are man's invention.
Divergence of religious belief is a result of The Fall. We have fallen intellects and wills.
However, unlike us, God can work everything to the good for those who trust in Him.