No question, Michael was very religious -- he was a theist, either a monotheist or a New Age theist (I think more the latter), who often said he prayed to god regularly.
But not a Christian, I think. I believe he only referred to Jesus as a model for ethical behavior. Are you quite sure he used the word "Lord" before Jesus? I'd be very surprised. He always sounded more like Thomas Jefferson, who was deist, not Christian -- he took a Bible, cut out all references to Jesus' divinity, which he thought had been added in subsequent centuries, and had it printed and distributed to Congress as a guide to moral behavior. It's nicknamed the "
Jefferson Bible." If anyone has evidence of MJ, post-JWs, referring to Jesus as God, or necessary for salvation, do give a link.
It does appear they're being brought up as JWs, which I greatly doubt Michael would have wanted. There's no good evidence they were being raised as Catholics, despite the baptisms and godparents, so I doubt he wanted that either. It's true that's traditionally the job of godparents, but as Tink noted, it's become more just an honor for many, and Lester is probably overstating his case to gain access.
But he probably saw Katherine as the lesser of evils, the most loving home he could place them in. I'm sure he didn't bother giving her instructions to keep them out of JWs, knowing that would be hopeless. Katherine will force those children into her own religion, something I believe is very wrong. I believe children should be taught character and morality, and about the religions and philosophies of the world, but not be brainwashed into a specific religion. But it's better than any of the alternative guardians, I guess.