Insightful and interesting thread.
I don't think it is possible to escape the damage, but I think there are multiple environmental factors that determine the extent of the damage and how well a person can heal. A child raised by two JW parents, with virtually all other family members also JWs, remain isolated within a bubble. They may be able to function quite happily, not really knowing any different.
I think a far greater potential for damage exists when only one parent is a JW. For me as a child, I was raised believing that my father was going to be destroyed - so I was afraid to love him too much. We looked down on activities he enjoyed - i.e. Christmas, birthdays. If he took us to a football game we had to make a big deal of not standing for the national anthem when he did - so I learned to belittle him because my belief system was "superior". I remember him taking my brother and I to a Christmas party and proudly suggesting to the magician that his pretty little daughter could join him on stage as an "assistant" - and how embarrassed he was in front of all his friends when I refused because magic was evil. So soon he stopped taking us anywhere. I was taught that his rules were not to be obeyed if they conflicted with those of the religion. If we ever did something wrong, we had to take great pains to hide it from him so it would not reflect badly on the organization - soon I learned that my father had no right to discipline me. I could go on, but bottom line is that my ability to develop a healthy father-daughter relationship was taken from me by the religion.
The damage to a child's ability to form healthy relationships with non-JWs can be profound. I still have difficulty with relationships - my children do as well, since they learn from watching me.
Relationships are just one aspect of damage - there are so many others, as this thread attests. And I completely agree that education is essential to helping repair the damage.