I agree that there should be a more family-friendly environment at Pride celebrations, particularly as there are more and more GLBT families with kids these days... not to belittle or demean the noble pursuit of raising children as a mere fad, but having kids is this decade's answer to brunch.
HOWEVER, I find that people turn into a bunch of nervous nellies when the question of what is appropriate for a child to see or experience is raised. They get all jumpy about whether a child is going to see a sex-shop or porn-company booth at the festival without realizing that children aren't really interested in all that and would rather have a playground somewhere in the festival where they can run around screaming and eating corn-dogs.
I mean, what do they think is going to happen if a kid sees a bare boob or buttock, or a floatful of gym bunnies dancing lewdly? Will it turn him to a life of crime and sexual predation? Hardly.
I saw nothing at the last SF Pride parade that I hadn't seen as a child, I knew that women had boobs and men had penises and saw plenty of both around the house, and I turned out... OK, maybe I'm not a good example. But psychologists will, I'm sure, agree with me when I say that children are not scarred by seeing nudity or sexual behavior; they are scarred by their parents making a big freaking deal out of it so they think it's something more than it is, either scarier or cooler than it should be.
And you know what? If I had to choose between my child seeing and emulating sexual behavior or seeing and emulating violence, I would rather have my eight-year-old bumping and grinding like the guys on the dance-club float than pretending to shoot at someone like the guys on TV.
Wouldn't you?
As for the baby drag contest, that sounds like something a kid could enjoy. It's just dress-up, and kids love dress-up, even boys. Letting a child explore different gender icons in a safe environment is a lot better than making them think there's something wrong with playing around with dresses or fake mustaches.
What Rush Limbaugh thinks about it is irrelevant. He and his ilk will always find something to rant about, it's what they do. And until we can start slamming the media for inciting hate crimes, we just have to ignore them.