I am not saying that the Church shouldn't teach about actions it considers sinful. However, punishing a child, a child who had no choice and nothing to do with their parents' choice, is a grave sin, in my opinion. This does not show a belief in repentance, this shows a belief in exclusivity and a choice of appearance instead of love. This has nothing to do with the parents who made the choice, it's about making sure they have no association with someone who sins. Sure, they say the girls can participate in Mass and religious education, but I think this has more to do with publicity than anything else.
Also, what other "sins of the father" are you going to choose to punish? Are we going to exclude children whose parents divorced and subsequently remarried without an annulment? What about those whose parents use artificial contraceptives? Had an abortion? Or had premarital sex, especially if they are single parents? Heck, let's put sexual sins aside. What about those whose parents have taken God's name in vain? Or those whose parents refuse to help the poor, raise them in lives of materialism, and teach them that money is everything (a good portion of where I grew up)? How about non-Catholics? How about we say, anyone who's ever sinned or won't stop sinning can't attend? Of course, that would be a problem donation wise.
When you close doors, you close hearts. Children have no say in what their parents choose to do. They are not the ones who sin in these ways, they should not be punished for the things their parents choose to do. However, accepting them may open a door into their families and may be a much stronger witness to the love of Jesus Christ than exclusion. Our Lord Himself said, "Let the children come to Me." An institution of the Church would do well to follow its Leader.