I am not a pagan parent.
I am a pagan child, with parents who have faced with her spiritual choices with amused condescention.
Parenting must be stressful enough, but pagans have added concerns on top of the usual ones. They have to worry about how other children will treat them, how it will effect their self-esteem, if they truly understand the path that they are following... I can only imagine whant it must feel like.
I can't speak for anyone but myself, but I suggest not worrying. I have been studying Wicca since I was eight years old, and before that I was Roman Catholic. I realized that the God I had been worshipping was maybe not for me after me sister and I were asked never to return to our Sunday school. (That's a story for another time...) A close family friend talked to me a little about Wicca and wondered if I was interested. I decided to do some study for myself and a few years later after I felt ready, I dedicated myself to the path I had chosen.
The whole time I have been a witch, I have had only one very negative encounter and that was with a adult, not a peer. I am not overly open about being a witch to my peers in general, simply for fear of being clumped in with the satanists at my school or being asked to turn people into frogs and other such nonesense. I don't want people to stereotype me, but I never deny what I am if asked. I don't think it's an issue to broadcast. However, all my friends know (some of whom are devoutly christian) and they don't care. It's not a problem with us. A couple have tried to convert me, but I just told them gently that I knew my path. They dropped the issue.
Being a witch has never given me any serious problems with my peers. Some of them don't understand, some view me with condescention or arrogance, some think I am trying to proclaim an image, a style or that I'm proving something to the world. I'm not. And I don't care if they think that. That's the only attitude a pagan child can take to being treated like an interesting specimen or a follower of Marilyn Manson.
Granted - while my friends might not care, I have a feeling that some of their parents might not feel too kindly towards me if they knew. However, that doesn't really matter either. It's their children's opinions - my friends' - that matter to me. While I do not broadcast what religion I follow, I do not hide it from those I care about. As for the rest of my peers? They don't know me at all. Witchcraft is another part of me.
I think that people may have misgivings about us if we yell to the world what we are, but for the people that really count it just doesn't matter.
Raise your children pagan if they seem interested, and just teach them to be tolerant. Explain to them that some people don't know about Wicca, or don't bother to look beyond the stereotypes to find the truth. Show them that they don't have to be afraid of people who don't understand them but they need to know also the sad truth that not everyone is willing to learn. Teach them, but don't ever force them. If paganism is not for them, respect their right to decide that for themselves. Ridicule is going to be the weapon used most often against them - prepare them for that. But you can't protect them from it except by comforting them and teaching them not to hate their taunters. Show them love and understanding, and instill in them 'thou art god': that they must respect themselves and others as sacred. Explain the balance and connection between all living things, and that in magick and life we must take responsability for our actions.
We will fall, I promise you, and we will cry. But teach us that both you and any Divine we believe in will always be there for us and we will struggle to our feet again. Maybe this path will not be us, but I urge you to teach your children about the God/dess you love.