First of all, since you liked Dennett's Consciousness Explained, you might find it interesting to check out an earlier book of his which tackles this question in detail: Elbow Room, The Varieties of Free Will Worth Wanting. Many of the points I'll make below are inspired by this book, which I think is well worth reading.
Now for some comments:
"But once genetic engineering pulls back the curtain and lets us see the little genetic man pulling the levers, the very basis of our social system is called into question."
Well, that was the question I was asking--is it? My opinion is that it isn't, once you really understand what the basis of our social system is--or more fundamentally what the basis of our free will is. To get at that, let's consider the following:
"Not to say that our entire character is determined by our genes. Only about half of it is."
Half? How about none? The word "determined" is the problem here. Our genes do impose certain constraints on our character, but the possible range of human behaviors is still so wide, and the possible interactions between that genetic inheritance and the environment still so vast, that to call any part of it "determined" by our genes is a gross oversimplification.
Furthermore, even if we grant for the sake of argument that some human behaviors are more or less "determined" by our genes, that still doesn't mean our genes are "pulling the levers" in real time, so to speak. They can't. Genes work way too slowly to be able to determine in real time the behavior of animals who have to respond to stimuli on a time scale of seconds. That's why, through evolution, genes came to produce animals with brains--so they could "delegate" to the brains the responsibility of making real time decisions about what to do to keep the animal alive long enough to reproduce. And this evolutionary product has come to have a side effect: that the brains can sometimes change their programming so as to make decisions based on criteria other than the survival of the body long enough to reproduce--in other words, to make decisions for the "good" of something other than the genes. One of the names we give to this capability when it is complex enough (as it is in human beings) is "free will".
Now it might seem as if I'm just substituting the brain pulling levers for the genes pulling levers--and in a sense I am. I am saying that ultimately our "free will", like all of our mental capacities, has to come down to physical events in the brain. But that's still a long way from saying that all of our behavior is determined by our genes, which is what the discussion is about. In other words (to get back to the original point), if your reason for being afraid of cloning (or genetic engineering) is that it's going to undermine your sense of free will, I don't think that's a very good reason--a cloned or genetically engineered human being has just as complex a brain as a human being conceived in the normal way, and that's complex enough to ground a capacity for free will in any sense that really matters.
"It would change my sense of selfhood in exactly the way that my sense of selfhood was programmed to be changed."
You're assuming that the sense of selfhood could be programmed at all in this simplistic way. What if the sense of selfhood is a complex outcome of many factors, genetic and environmental? What if it's so complex that it can't be predicted in advance? Don't read too much into my wording of the conditions of the problem: when I said "people who understood exactly how and to what extent each gene would affect your personal characteristics and traits", I intended to include the possibility that when you add up all the "to what extents" of every gene, the total comes to less than 100%. In other words, I left open the possibility that even these perfect genetic scientists who know all there is to know about how your genetic makeup affects you, still don't know everything about what makes you you (because there are environmental effects and/or random effects that they can't predict). And if that's the case, they may not be able to predict in advance what kind of sense of selfhood you will have.
"And it would only stick in your craw if your genetic programming allowed you to take exception to your fate. If you were designed as a menial laborer or sex slave who loved being a laborer or slave, it wouldn't stick in your craw."
In other words, if I were designed not to have free will, I wouldn't have free will. I suppose this is true, but it doesn't really get at the ethical issue I was trying to get at. It does get at another important ethical issue, which is whether it is ethical to design human beings who don't have free will--but that's a separate issue that I won't discuss here. So let me try to clarify the issue I was trying to get at.
I should have stated as a condition of the problem I was posing that the "genetic scientists" were not tampering with the genome to the extent implied by your illustrations above. The kind of case I had in mind was more subtle: where basically I have a normal capacity for free will, but with a few caveats. For example, suppose the designers "implanted" a strong bias towards obeying their orders, even if they seemed irrational. (This kind of thing is a sci-fi staple, of course.) I might go along happily ignorant of this quirk for years, living a perfectly normal life and making perfectly normal decisions just like everybody else, until one day (let's stick with the sci-fi melodrama for emphasis) I discover that one of my designers is plotting to take over the world, and when I try to stop him--boom! The "implanted" bias kicks in, and I find myself unable to resist his orders--but able to hate being in that condition. (Why am I able to hate being in that condition? Because I have lived a "normal" life up to this point, so I know what it's like to be free--at least as much as anyone else does.)
In this type of case, obviously it does stick in my craw that my designers did this to me, and the reason it does is that it keeps me from doing something that I believe to be morally right--or at least it forces me to fight very, very hard to overcome this handicap that I didn't want. But notice that the effect on my sense of selfhood depends, not just on the impairment being purposely imposed by someone else, but on it being purposely set up to work against my moral beliefs. The same kind of effect could be obtained today by drugs and hypnosis, and it's the nature of the effect, not the nature of its cause, that is the crucial feature. (And what about the "moral beliefs" I just referred to? Couldn't they be "programmed" into me instead of being "my" choices? Well, remember that I said I lived a normal life up to this point, so my moral beliefs are at least no more "programmed" than anyone else's. In other words, whatever else may be said about how moral beliefs come about, I am not "impaired" in this way compared to a normal human being--my impairment is of another sort.)
So I should have clarified what I said before as follows: The only thing that would stick in my craw would be if somebody purposely designed me to be less than fully functioning in some area, and the reason it would stick in my craw is not that "genetic engineering did this to me--let's get rid of genetic engineering", but "somebody used genetic engineering as a tool to undermine my ability to uphold my moral beliefs--that person needs to be stopped". So the ethical issue is not that we should ban cloning and genetic engineering and so forth because they're inherently bad, but that there are inherently bad ways to use cloning and genetic engineering, just as there are inherently bad ways to use any tool, and we need to be aware of them and take steps to guard against them, so that we can make use of the good ways of using these tools. That's the way to protect our sense of selfhood--in any sense that matters.