I would agree that there is a variety of catholic schools and I would guess that in a low rate of catholic's attending the level of 'observance' might change.
In my town we have 4 catholic primary's and most years they are completely filled with catholic children only. We do have plenty of choice of schools here though and so I have no problem with faith schools - as said previously I work for them but I'm actually CofE. My dc go to a non faith school but will hopefully go to the catholic secondary that I work for. I want this as we have very poor secondary's in our area and the catholic school is outstanding and our students achieve so much more.
That said, I know we are lucky to have many choices in my town and I completely understand if your only practical choice of school is a faith you and you actively have no faith that you might be upset with your children being taught with a strong religious slant.
The 'observance' of the religion is much less endorsed in see I say schools than it is in primary schools and much easier to avoid if you so wish. In this section to you are much more likely to get other religions in the student body.
Op, for what it's worth it sounds like you have a great balance. Respect the school and have develop an open relationship with your DC's to discuss what they learn, what they think and believe which ultimately is what all parents should strive for no matter what school their children go to. A good catholic school (if you can get a place) will be a great place for any child if you feel the way you do.
I was brought up with a good founding in religion as a child and admittedly I've not been as good with my DC's (I stopped regularly attending church when they were small as it got in the way of life if I'm honest) but we talk about God, Heaven, afterlife etc and I ask them what they think/believe and why. Both of mind at different times think completely differently about God but both question nicely what others might think or believe.
My experience of working in catholic schools have been amazing. I love the feeling of family, community and care that exudes from the staff, children and all involved in the school. We get so many comments from visitors how welcoming our schools are and I agree that is what I felt when I first arrived too.