What do you do with I John?

I've been reading some exegesis of late that relegates Romans 8 and Hebrews 3 &4 (the rest for the people of God) to after death. They are doing it because it doesn't fit their theology; they believe the Westminster Catechism, which says in Question 149: Is any man able perfectly to keep the commandments of God?
Answer: No man is able, either of himself, or by any grace received in this life, perfectly to keep the commandments of God; but does daily break them in thought, word, and deed. [my italics]
Hence, they have to relegate those promises to heaven. They also have to hold to penal substitution exclusively and jettison any Christus Victor interpretation. [As an aside, if you want to dig into this further, I suggest Saving Power and A Community Called Atonement.] There can be no real transformation in this life, just sin and repent in an endless cycle!

While they can make a tolerably fair (actually closer to poor) argument, I want to know what they do with I John. I John has some very dangerous statements, for example: Τεκνία μου, ταῦτα γράφω ὑμῖν ἵνα μὴ ἁμάρτητε. My dear children, I write these things to you (plural) so that you will not sin. (I John 2:1a) or πᾶς ὁ ἐν αὐτῷ μένων οὐχ ἁμαρτάνει· πᾶς ὁ ἁμαρτάνων οὐχ ἑώρακεν αὐτὸν οὐδὲ ἔγνωκεν αὐτόν. Everyone who abides/remains in him does not sin; The one who sins has either seen him or known him. (I John 3:6), or (and this is the real kicker) Πᾶς ὁ γεγεννημένος ἐκ τοῦ θεοῦ ἁμαρτίαν οὐ ποιεῖ, ὅτι σπέρμα αὐτοῦ ἐν αὐτῷ μένει, καὶ οὐ δύναται ἁμαρτάνειν, ὅτι ἐκ τοῦ θεοῦ γεγέννηται. Everyone who have been born of God does not sin, because his (God’s) seed abides/remains in him/her. Indeed (taking καὶ as emphatic) he/she is not able to sin, because he/she has been born of God. (I John 3:9) (my translations, but check your own favorite translation). So, what do you do with these? They obviously refer to life on earth.

I know that some try to explain it away by translating the present as “continue to sin” (NIV, TNIV, for example). But, that doesn't solve your problem; if one doesn't continue to sin, that means they stop sinning. I suspect what they are actually thinking is “doesn't continuously sin.” But that is not what the Greek says or even comes close to meaning! So, I repeat, What do you do with I John?

I recently heard N.T. Wright speak at SBL. His closing statement was that we should allow scripture to speak to us more than our traditions. (Incidentally, I was sitting next to Peter Enns when he said this. Peter said aloud, “amen!” He ought to know; he lost his job because he wasn't “reformed enough”). So, is the Westminster Catechism speaking louder than scripture?