I am in the same boat. I am trying to keep a good balance between teaching and playing. My first son DS4.5 was a self driven learner. I would sit with him from the age of a few months and read, but later he would also sit by himself and do academic activities. I did teach him phonics and spelled out words, but nothing extravagant. He pretty much figured out how to read by himself. He would also sit by himself and make words, trace numbers and letters etc. To this day he is a kid that gets up in the morning and writes and does math in his room. All self motivated.

So then there is DS2.5....a bit of a different story. Did the same thing with him although once he hit 12 months and started to walk it was hard to get him to sit still so I tried the best I could to read to him. After the novelty of walking wore off he got obsessed with me reading to him. He also learned upper/lower case alphabet before he was 22 months and he leaned the letter sounds in about 5 days, before the age of 2. The difference is, he was/is NOT self motivated. I had to sit with him and he LOVED it but wouldn't play with letters/numbers by himself like DS4.5.
Now he is reading a few words and can sound out words when looking at them or when I ask him what letters are in a word. But again, I am right there working with him.

Am I "hothousing"...is working with your child with the purpose of teaching them "hothousing"? He is extremely interested when we work and doesn't want to stop. He loves "Reading Eggs" and "Starfall". But it is wrong to work with him when it seems he has not much interest doing it independently?

As far as phonics vs. whole language, I am doing both. I think a combination of the two is best. I do feel DS4.5 knew phonics but he never went through the stage of sounding out words as he read. He just read. So I am assuming he caught on to just looking at the words, knowing.

Thanks for bringing up this topic. I have been wondering about this issue as well.