why is it that kids who have parents that hide them from everything "bad", wind up so messed up, narcissistic, and are generally unable to cope with life?
Precisely because!
As the Japanese say, "You only know true kindness through suffering."
If you drove your car into a tree and became paralyzed, you might become much kinder from a firsthand understanding of deep suffering. (You might also become angry and bitter. You might even do both these things at the same time!)
No. I'm thinking more along the lines of stuff that happened to members of my family and their friends in Korea under the Japanese occupation. Yours is indeed a first world perspective. To borrow your phrase: "To truly appreciate how good your life is, you must first 'drive' one that is a lot worse."
Precisely because!
As the Japanese say, "You only know true kindness through suffering."