daver, you brought up a good and fair question, and I think Diogenes and Cambrian, among others, have done an excellent job of trying to answer it.
There are certainly some very liberal areas of California, but as Diogenes mentioned, it would be unfair to label the whole state that way. I also have a feeling that some of the news reports you alluded to in your post are some of the more "spectacular" ones, ie, incidents that would even raise eyebrows out in California.
I'm not sure what you meant about "alternative lifestyle education," but I'm basically a product of California public schools all the way up through high school, and I don't remember having any real exposure in the classroom to "alternative lifestyles."
As for why "everyone" wants to go to CA schools -- if you are already a CA resident or plan to become one, it's a ridiculously good deal -- 3 of the public medical schools (UCSF, UCLA, and UCSD) all have excellent national reputations (for what it's worth, all three are in the "top 25" for US News). UC Davis is also consistently considered one of the top primary care schools in the country. So, you have four public medical schools that offer pretty low in-state tuition, that all have stellar reputations, offer good training, etc. I'm not sure any other state can boast that. Then of course there are the private schools like Stanford and USC, which also have great things to offer -- Stanford has amazing research opportunities and a great 5-year plan for med school while USC has amazing clinical training.
Outside of the educational benefits, the climate in California is fairly mild, and most of the larger cities (San Diego, LA, San Francisco, Sacramento) are easy drives to the beach, the mountains, and the desert -- again, not so with many other states around the country. If you are an outdoors person, California is sort of an ideal location for year-round recreation, no matter what your particular interest.
Out of the places I've lived (California, Texas, Oklahoma, Arizona, and New Mexico), California probably has the most "balanced" political views of any of those states, in my opinion. You really do see a huge variety -- there are extremely liberal pockets of the state, and then very conservative pockets. In general, I would describe the political climate as "moderate" -- keep in mind that this is the same state that had Pete Wilson (R) as a 2-term governor, and whose voters passed extremely controversial legislation regarding immigration and affirmative action, in the form of Props 187 and 209. Given, these pieces of legislation have since been tied up in the courts, but the public sentiment was for them.
Like any place, I think California has its share of problems, some of them potentially quite serious. However, I still would really like to return there for residency because I think its one of the most interesting and dynamic locations in which to live and practice medicine in the US.