Arkie

This, all day every day.

Not hypothetically, I'd focus on any number of the outdoor components of Scouting before I'd mention any of the Citizenship badges, Family Life, etc. But to the extent it's a topic of conversation, I can't imagine telling a prospective Scout, "At some point before you earn the rank of Eagle, you'll need to work on a merit badge where you'll be asked to think about and discuss similarities and differences between you and others." YMMV

Echoing what others have already said, the Scouts for whom I've served as MBC over the past year or so have seemed to enjoy the discussions on our various similarities/differences with some very poignant and impactful stories about bullying in school, etc. for looking/talking/acting "different". None of our Scouts or their families have indicated that this something that would cause them to leave, and considering we're in a geographic region where anything "different" is automatically suspect, that's saying something. TL;DR version - it's a nothing-burger from the perspective of your theory.

I don't read it as sequential time, i.e. only after the merit badge(s) is/are earned. I understand it to be any time on-the-water since joining.

Long time lurker, first time poster who attended summer camp for the first time last week as an adult leader (son attended for his first time as well). 20+ Scouts and 5+ leaders from our troop with a total of around 400 Scouts in camp. I would echo almost every one of your points based on feedback from the other more experienced leaders and my own observations. Our main issue was with inexperienced/first year staff, some with what appeared to be extremely limited Scouting experience. Lots of bickering among staff in front of the Scouts; requirements in the Green Bar area not being completed due to staff deciding not to instruct the rest of the session time; merit badge requirements being signed off without actually being completed and/or requirements being completed but not signed off. However, Scouts enjoyed it and felt the week was an overall positive, so all of this is just adult grumbling. Wouldn't trade the experience and look forward to many more. - Arkie