Federation Ethics Make No Sense
This is bogus on multiple levels, and kind of troubling it you take it seriously.
What would be interesting is to have some Star Trek in which this weird hang-up actually mattered. Are other civilizations which practice genetic engineering unwelcome within the Federation? It could be viewed, within the wider galaxy, as a pretty extreme political stance, a result of a particular historical accident within Human history, whose lessons are not more broadly applicable.
Or which abnormalities count as "serious"? You don't see anybody in Star Trek wandering around with glasses. It's obviously easier to wave away cancer-causing genes once you've got a cure for cancer.
In what ethical system is it OK to blame the child for this, anyway? I can't think of any better way to encourage potential Kahns to antiocial behavior than to close the door to all professional and political success. (What is with the obsession with Asians as genetic supermen?) This bit of boneheaded worldbuilding is profoundly pessimistic, suggesting the Federation couldn't find a place for a non-expansionary Borg (too inhuman) and wouldn't have let Data into Starfleet either (too artificial.) Heaven help them if they encountered a machine race that wanted to team up.
This season of Deep Space Nine has really been bothering me by taking a reactionary approach to any politics that come up; the most painfully earnest TNG or TOS episode is far preferable. Chemical warfare, evidently, is just fine with the Federation. And the entrance of Bajor to the Federation is one to be signed by admirals rather than diplomats (look at who's at the table in *that* episode.)