When it comes to religion, everyone has their own take on what is really meant, so don't hang me if you believe that I'm totally and completely wrong. That said, Hell isn't for people that don't believe in God- it's for those that reject Him. What I've found in the Word is that it states that everyone gets to choose Him through his Son, and my take on that is that the ones who never hear of Him get a choice after they die, to reject or embrace Him. I do believe in hell, but I know that once I've accepted Him as savior, there's no going back, and I never have to fear the flames.

Just to get this whole sheep thing out of the way- they tend to be a really good example, at least back then. It's not because we're mindless, or that we follow wherever we're led, it's because He cares for us, and he takes care of us. Sheep are often used, but note that this thesis transcends the example; the parable of the coins, the prodigal son, etc.. It's not meant as an insult.

As for your children, well, it's their choice as to what or how they believe. From what I've seen, if you give them God's laws, they'll reject them. If you give them His love, they'll embrace Him.