It is always a dilemma: do you better equip your children to deal with a hostile world by sheltering them from it and its effects, or by carefully exposing them to it, with explanation and caring, so that they learn to navigate within its currents without losing their course?
In our childrearing (kids now 18 and 15) we've steered a middle course, picking and choosing what to shelter them from and what not to with some care. If we have erred, it is on the side of exposure, but so far the results have been good. I know kids whose parents have been extremely strict, though not as strict as you describe, who ran away or otherwise threw over the traces as soon as they could. I've also known kids who got in trouble because their parents were indifferent. So, I think the key is vigilance, but not turning your self into a prison warder for your kids.
I have also made it a point to study those I know who were raised in a fundamental or otherwise strict disciplinarian household, and have become more liberal. I have always been very curious to know why these people chose to live differently from the way they were raised.
I have heard 2 things over and over again. One, they will say that their parents just want them to be happy, which is why they are now living with their lover instead of married, or raising a child out of wedlock, etc. Another thing I hear is that their parents had a bunch of rules, but no reason why they imposed these rules.
One benefit of living in today's world is that there is no shortage of bad examples. Trying to explain why promiscuity is bad, or why behaving politely in public is a good thing, is quite easy with so many counter-examples walking the planet.
I think that the important thing is that parents should be clear about what they expect from their children. If you would be disappointed if your child got pregnant out of wedlock, then tell them that. However, you have to look at root causes. As Ann Coulter has written, no one walks down the street and is struck pregnant. So simply saying, "Don't get pregnant" doesn't cut it.
I appreciate your kind post, and perhaps you are correct. You do have much more experience than my husband or I. In 18 years we will look you up and let you know how the grand experiment went! :)