1) Meh, don't have a Catholic funeral if you think there's a chance the priest might say something negative because your child committed what's widely believed by Catholics to be an unforgivable sin.
2) The priest should know better than to flat out say it. Knowing there's likely other people around that kid's same age, speak to the grief experienced and the tragedy of the child not seeking out other, less horrible solutions. In short, dissuade the lemmings while trying to help people through their grief.
3) Some priests just shouldn't be in that situation because it's not their strength.
4) Religion is D-U-M. Don't put stock in what people say about fiction.