We've decided in favor of character training for three reasons. I'll share them and then the method we've chosen to employ and why.
1. Our goal is not to train our children to behave, though I certainly wouldn't complain if that were a byproduct. We teach character because we want to hold up God's righteous standard to our children at every possible turn.
2. The only honest reaction to God's righteous standard is the recognition of sin. I know our culture thinks it's important to give our children self-esteem. Our children already have self-esteem, we want them to see their sin (and ours, too). No self-recognition of sin = no need for a Saviour.
3. We want to emphasize God's grace, His mercy, His forgiveness, and His empowerment of believers to obey Him via the Holy Spirit. I think I always come away more beat up from our character studies than my kids do. It's the perfect opportunity to confess my failures to my children and to God and to pray that the Lord will change us all for our good and His glory.
My husband decided the way we should teach character traits is by linking each one back to one or more of the 10 commandments. For one thing it's practical because our children already know the 10 commandments, whereas they're less familiar with the entirety of the law. For another, the 10 commandments are a summary of God's law and the two commandments a summary of the ten.
This way whatever else we use (examples from nature, role playing, etc.) we always come back to God's law. For instance, if we're studying loyalty, we talk about how loyalty is required to keep the 1st commandment (Worship God only) and the seventh (Do not commit adultery). Some character traits such as obedience or responsibility may be more general and without them none of God's laws can be kept. Even in those cases, we try to get as specific as possible. For example, responsibility, doing what is expected of us, is necessary if we are to love our neighbor as ourselves (summary of the second table of the law). The kids amaze me with how good they are at finding connections between character qualities and the 10 commandments. It's our desire that by doing character training in this way, we will have humble children who have a realistic knowledge of God's perfect standard and some insight into the depths of their own sin. It's our prayer that each of our children will gratefully accept God's grace in salvation and place their faith and trust in Christ.
And yes, she did hit me with that snowball.