Why would we want Isla's dolls to have genitals. Simple: Gasp! She has genitals. So do all of her baby friends, and every other human being I know of. Why would her dolls have faces, arms, hands, feet, and bottoms like her, but in the place of a vagina, only a flat spot? Rag dolls barely resemble real-life babies, so their missing genitalia isn't an issue for me. The baby dolls she likes, though, are of the plastic, extremely lifelike variety, and I don't want my daughter thinking there is something wrong with her because she has a vagina rather than smooth plastic in her diaper.
An argument against anatomically correct baby dolls is that it would make kids prematurely interested in genitals, and cause exploration. I think we can all agree that this happens with or without dolls, and maybe exploration with one another would be less important if children could answer those questions by looking at their dolls.
Another thought - what about siblings? When we have another baby, I bet he or she will have genitals. Would the "progressive and understanding" women who are so against anatomically correct dolls consider a new baby to "...numb [our children] to the sacred nature of our bodies," or see the new baby as "...adding to the pile of [nudity]?" Then why on earth would a doll?
I'll have to finish this when I have more time, but please post if you have any ideas that can enlighten me in either direction.