jmars - All your points are well taken. As a parent, I've got two issues I'm trying to address. I'm guessing you do too:
First, some of the books she reads would make more sense if she knew about Christian rituals and beliefs. So I need to give her some cultural reference. The tricky part is finding kid friendly sources that educate but don't indoctrinate. jomike suggested "One World, Many Religions" by Mary Pope Osborne. It's on order and I will let you know.
Second, some well-meaning grownups inevitably will, out of concern for her immortal soul, try to persuade my daughter into their religion by telling her some very disturbing stuff. As grown-ups, we can laugh off the fire and brimstone, but that is sick imagery for a seven-year-old to process. Considering the positions of authority that adults occupy in her young mind, the burn-in-hell shtick could be hard for her to handle. The only solution I see is to give her an over-view of beliefs and arm her with the ability to respectfully say, "Thank you, but my family and I don't follow your religion." I guess it's bit like talking about the birds and the bees: would you rather that conversation be started by a stranger or by you?