Ooh, interesting post - I shall take it a bit at a time.
Yes, I did make a slight groan at Letterland...! It's great for teaching recognition of letters, as you've discovered, but is horribly limiting as regards sounds and then becomes terribly confusing whilst trying to rectify this within their little methodolgy. You get many children who can only recognise them in the context of the Letterland materials - because they are so visual. You also get children who cannot get past 'annie apple' for describing that letter or sound... v frustrating.
A letter per week is very slow. It fits in with the enrished curriculum you speak of, but I think there is quite an interesting debate surrounding child-directed learning and 'formal' teaching. Briefly, I agree whole-heartedly with learning being more child-initiated and wish that the Foundation Stage philosophy here was continued into Key Stage 1. However, I do believe it is necessary to teach children some things - indeed, they are crying out for it in many areas. They know things are done/understood a specific way and they want to be able to do it. I don't believe any school, however it is organised has the people and resources to truly deal with this truly individually. So, if you are going to directly teach something, I do believe it is best to do it properly - and synthetic phonics is ideal to teach to young children in that it is so multisensory and works so fast - the children see immediate results.
I'm sure the 'beginning with' fixation does come from the fact that initial letters are used a lot with our adult literate world when using abbreviations and anacronyms. BBC, ITV, Maccy D's, PS2, KFC etc all use initial letters. People's initials of course. However, it does seem to have gone a bit too far with reading. - maybe your children could take in some objects with the chosen sound in the middle and end??!! That would be a bit different!
I think your concepts are a bit muddled - but only because that is how we have been taught and led to believe the world of reading works, so it's quite normal. It's how I thought before I was introduced to all of this stuff. What is becomes clear you are doing is working from the letters of the alphabet first, when what is really effective is to work from the sounds first. In JP, the snake action is for the sound sssss, not the letter S (ess). It might seem trivial, but actually makes a lot of sense to children taught from that persepctive. So, the snake action and the sound 'ssss' can be heard in the words bus, grass, race, circle, scissors and base - and is of course spelt s, ss, c, sc, -ce and -se. For a child to think that everytime they see the letter 's' it is there for the 'ssss' sound is confusing when they meet the words 'please' 'sheep' for example. So, I never use the phrase 'what does this letter say?' as this indicates the 26 letters have one soudn each, which is far from the truth.
When taught fully, I have only ever found that JP complements anything done in school as it is the one thing that makes all the sense and pulls it all together for children. However, done in bits and inconsistently, I can see it would seem a little weird.
It is clear that your boys are very /good/ visual learners: however, I don't think that means that is their one strength and they can't manage any other way. The thing is, reading is a visual and auditory activity - learning to read can never happen on visual memory alone. It can often begin that way, but the human memory just hasn't the capacity to cope with all the words it will encounter by memory along: there has to be some understanding of the component parts. Plus, as more and words are encountered, so many have similar overall shapes, it can be very confusing. Often, children with good visual memories give the impression of learning to read with great enthusiasm, ability and progress at the start, only to really bomb a few years down the line with little hope of regaining their ability as too many bad habits are too well ingrained and they are almost past the threshold to 'relearn.'
It might be that for your boys, auditory learning is not as easy, but that can still be achieved with practice and reinforcement.
Of course the letters need to be recognised in order to learn to read; the fact that your boys know them so well means that matching them to sounds should be quite quick as they will only have one new thing to remember. I couldn't imagine how it could be a general indicator of potential learning ability as learning to read is dependent on so many other factors.
Quick question - do they know the letters by lower or upper case?
Familiar words like you describe are often picked up quickly by children with good visual memories - but they are recognised more as pictures than words. I have 'tested' children like this before - and often 'Tesco' or 'McDonalds' written in normal handwriting is a complete mystery to them.
I am sorry whole words are being given to them soon - I'm not convinced it will be good for them in teh long term, from what I described above.
I don't think you are being a pushy parents - I think you are concerned that your boys' learning is going to progress as it should and you should be proud of yourself to be a vigilant and caring mum to do so.
Speech development is key to reading - in its comprehension more than articulation. There is no point children learning to read words they have never heard before but I have had a few children with speech impediments read very well - as long as they are left to pronounce the sounds as they are able.
Hope this helps for now - dont' apologise about a long post....!!