Apologies for the slow response. You have hit on a real issue and cause for concern among the Christian community with regard to the fragmentation that exists in places. Your question about whether Protestants have got the interpretation of the Bible wrong is a little difficult to answer because there is such a range of views [as you point out]. So which Protestant view are we to critique?
In general, I think a Protestant reading of the Bible is correct and in line with the teaching of Jesus and the Apostles. However, that doesn’t mean Protestants get it right all the time or are beyond critique.
The authority of scripture is a biblical doctrine and one we need to uphold. If we allow anything else to be an authority in determining our doctrine like individuals or tradition or denominations - then we are open to being led astray by the sinfulness of mankind rather than being led by the inspired word of God. This is what has happened in many liberal churches where the authority of scripture has been denied and this has led to diverging views of scripture. This is happening in the Anglican Church where the authority of scripture is being denied by certain groups in the US who have appointed an openly gay bishop which has led to considerable disunity within the Anglican community.
It’s worthwhile noting, that this isn’t a new problem. False teaching was just as rife in the days of the Apostles as it is today. Paul was constantly rebuking churches not to follow false teaching and reminding to stick only to the Gospel he and the other Apostles taught [Col 2:4, 8; 2 Tim 4:3]. Jesus also warned that false teachers would come [Matt 7:15]. So the situation we have of many Christian sects is not good, but is to be expected.
When it comes to interpreting the Bible, we need to do a number of things to ensure we understand it properly. Firstly, we need to look at it in its context, including how passages fit within God’s entire plan for salvation [i.e. the whole Bible]. Secondly, given Jesus death and resurrection is the focal point of the Bible and God’s plan to save the world, we need to interpret scripture in light of the cross. That is, when reading the OT we want to be asking how this points forward to Jesus and when reading the NT letters, asking how this reflects back on Jesus. It seems to me that many mis-readings of the Bible occur when these things are ignored. So in the example of OT Jewish rituals and cultic practices such as the Passover, animal sacrifices and the role of priests, these things are no longer practised by Christians because Jesus has fulfilled and superseded these things. The old covenant has been surpassed by the new covenant instituted by Jesus [Matt 5:17; Luke 22:20; Heb 8-10].
Going forward we need to continue working hard at reading and understanding the entire Bible so we can properly interpret each bit in light of the rest. We also need to be wise about where to be gracious with others over certain differences and where to stand firm.
Yours in Christ