Mr. Graham,
Thanks for writing such a questioning essay. I have two young boys and have spent a lot of time thinking about how my wife (an African-American physician) and myself (a European-descended American evolutionary biologist) are going to say to them about sex and drugs and death. My wife and I usually resolve these conversations by saying that we won't have to have "the talk" because our sons will be hearing about birth control from the time of their own birth. So far that's been true. Now that my older son can talk, I'm surprised about the stuff that I feel perfectly comfortable saying in front of him. However, I still feel like there's stuff I'd have trouble being honest about (like explaining why people abuse drugs --- I don't understand it myself). I've particularly thought about the duality of sex that you mention: "Yes, your parents have sex, and if they didn't you wouldn't exist, nor would it be nice to live here, but you shouldn't do it because you don't know what you're doing." Obviously there are certain ways I can be honest, but it ends the conversation a lot faster to just lie.
Another issue, that you mention in your notes, is there are some things that kids just believe, without adults trying to deliberately deceive them. My son probably thinks that Thomas the Tank Engine is somewhere right now being really useful.
My parents could have lied to me about a lot, but they didn't because I have three older brothers and it was hard to keep lying to me when my brothers were finding out they'd been lied to. Also, I think as parents they just tried to be honest about things like sex and death. One of my brothers asked my father what a blow-job was in the middle of Thanksgiving dinner. I wasn't there, but my mom tells me that my father did, in fact, tell him later.