I doubt it will 'kill off' the Catholic Church in Oz. It has too long a history, too many adherents and too much inertia to be derailed by a single issue alone. Skillfully handled it could just as easily end up being a turn towards something positive (though not if George Pell has much to do with it). Go back through the history of Catholicism and it has always been in some sort of crisis; which might well explain why it has always survived.
I s'pose I'd call myself an atheistic existentialist if I had to put a label on my beliefs. Nevertheless, I have an MA majoring in world religions (from a School of History, not Theology) and did that purely out of personal interest. After all, it's work, sex and religion that makes the world go round, so understanding systems of belief (including the many 'denominations' of atheism) is an important key to understanding the world. I don't hate or resent any of them. I find them all fascinating (particularly Hinduism and Taoism) and consider most of them to be sincere attempts to make sense of life, the 'human condition' and death. I consider most of them contain substantial universal truths, but are usually also encrusted with dysfunctional traditions from their culture of origin.
I was brought up Catholic, but at something of its more 'liberal' end. The papacy was not of much more significance to me as the royal family is to the average Australian. Papal infallibility was seen more as 'the Pope only guarantees what he's saying is right when he makes 'ex-cathedra' ('officially from the chair') statements'. I think he's (they've) only ever done that twice, which means everything else ever said by any Pope may be completely incorrect. There was a big emphasis on personal responsibility for working out what is right. Believing something simply because the church said it was so was the same as the 'Nuremburg defence' ('I was only following orders'). I still have a vague fondness for the more attractive bits of Catholicism and particularly for how it is so strongly connected with western civilisation, I just don't happen to believe it's actually true.
As for the 'seal of confession' thing. Under the doctrine of freedom of conscience a priest could reveal things said if he genuinely believed that was the right course of action, in spite of any 'rules' to the contrary. However, I don't think requiring people to do so is a sound idea. State laws have no more real validity than religious rules; after all nationalism or any sort of civil society is just as big a 'fabricated construct' as any religion. Pedophile clergy are hardly likely to confess to priests who they know have genuine morals. If anything they will confess to co-conspirators or to a priest who doesn't know them. The latter won't be able to see their face and won't know their voice. The person confessing will also probably not use modern legal language for what they've done, but say something like "I've committed impure acts with others", which could mean almost anything. Even if it's clear what they've done, it might not be clear that the person confessing is from the clergy. It could just as easily be a person confessing to incest with their own children or relatives. It might be a 15 year old confessing to 'fiddling' with a 14 year old. Would they have to 'dob in' just clergy who made such confessions, or all of the above? What about other serious crimes? What about 'dobbing in' someone who confesses to a particularly violent sexual assault against an 18 year old female, or a 22 year old person with a disability, or an elderly person? Or are other serious crimes somehow OK?
Actually there is a much easier solution. Why not make it compulsory for the perpetrator to confess to their crime? If I remember my early religious instruction correctly, if a person confesses to theft, a condition for absolution is to make restitution (i.e. give back what you stole or make up for it to the person you stole it from in some equivalent way). Using a similar principle, it should not be doctrinally difficult for the Catholic Church to make handing yourself in to the relevant civil authority as a condition of absolution for pedophilia.
I see a bit of a relationship between compulsory celibacy and the potential risk for compulsive sexual aberration. My personal view is that the Catholic Church should ditch compulsory celibacy for its clergy. It wasn't always so, and doesn't need to continue to be. IMHO it's perpetuated because it seems far easier to 'control' a gaggle of unmarried people that are set apart from the general community, than a group who also have strong family networks. I think a clergy with lots of married people would be much more vibrant, much more morally healthy, more in touch with the community and better able to serve them.
Civil law makers also need to think more about the issue of child sexual offences and how they should be dealt with. For example, many pedophiles were also molested themselves when they were children. How do you best deal with a person who is both a perpetrator and a victim? The media also need to take more responsibility about how they deal with it. In the pursuit of ratings it is not too hard to turn a serious criminal issue into a lurid witch hunt, undermine investigations, create unnecessary panic, distort evidence and ignore proper judicial process. I'm waiting for one of the current affairs shows to discover that the concept of the 'presumption of innocence' was actually invented by a Catholic cardinal (Jean Lemoine) and therefore must be part of some huge conspiracy to protect priests.
Which brings me to my final point. Most people feel a revulsion about pedophilia. The Catholic clergy are an easily identifiable (and slightly 'odd') group and many people probably think that 'hammering' them is the way of solving the whole problem. But the problem is much, much larger. I went to Catholic schools and was never molested. I knew of one priest who was rumoured to do it and would have told him where to go in no uncertain terms if he had attempted anything. But I also personally know of three dads who molested their own kids, two Police officers who were involved in child offences (and a conspiracy to cover it up), and my brother-in-law (a male nurse and hospital administrator) received death threats for breaking up a ring of staff at a psychiatric hospital who thought it was 'just one of the perks' to sexually abuse young patients. Any investigation needs to go much deeper than the Catholic Church. I hope we have the guts to look deeply into other hallowed institutions and even our own extended families.