Exactly. I couldn't have stated this any better. That's exactly how my family worked. As kids, we worked to maintain our parents' trust. We respected and feared them (in the biblical sense of the word fear) because they lived their words. As parents, they gave us the freedom to make our own decisions unless we broke their trust. I even did a few things that by all means should have broken their trust, but didn't. That fact alone was what set me straight.
Regarding leading by example, and I'll use the alcohol example that's already been brought up, I believe that my goal as a parent is to teach responsibility above all else. With most kids, you can't enforce a strict anti-alcohol policy with society the way it is today. If you want to try, great, but you'd better not touch a drop yourself or they won't follow your words. My intention is to show him responsible drinking at home. He'll be able to drink before he's 21 (a ridiculously high age IMO) so long as it's done at home with family and he doesn't abuse it. If he goes too far, he'll be cut off and we'll start over. This way alcohol won't be treated as a taboo, which removes the allure that causes a lot of teens to abuse it. He'll know how to be responsible and it won't be a big deal, since his parents allow him to do it at home occasionally and won't get upset as long as he makes the right decisions.
By way of example, my mom's father always insisted she go to church on Sunday, but never went himself. Guess what? She stopped going once she moved out. Her and my dad started going again when they were expecting me and always went to church with us. As a result, I've never stopped going to church. That's how it works.
Pablo, I have one 8 month old boy with a second child planned for the future, but, as you can tell, I've put a lot of thought into this already. My opinions are largely based on the way my parents raised me and, for the record, I think they did a great job.
