You make many valid points.
Every child is going to make bad choices when they are young, I do not think they should be 'life choices', choices that COULD effect them negatively for the rest of their lives. I would rather them learn from me and my wife and what we have experience in our lives to help my child.
For example, when I was about 14 or so, because of peer pressure I took some drugs and was so high, that I was not in control of myself. Not being in control of my actions scared me so, that I never took drugs again. Well, when my son was about 14 or so, I shared with him that whole experience and mention to him how after that I was able to fight off peer pressure and made my own decision as to drugs.
To me, that is what parents should do, guide their children so that they can lead a very happy life. To me, if we dont, that I think we have failed as parents.
And yes, parents should avoid extremes in either direction, otherwise children will be unable to make inform choices when they are growing and when they get older.
And again you are right, if a child or adult makes a mistake, then within reason, the parent should accept and help them, that is what love is.