A few things: I never indicated Jesus was merely human.  He was not.  He was/is both God and man.  Next, God never "used" the Jews or any of His children.  Good fathers do not use their children.  When Jesus became Incarnate it was necessary for Him to be embodied in a gender (male) and an ethnic group (Palestinian Jew).  Being human requires gender and ethnicity.
I too would like to see another (perhaps better) defense of the difference between the institutional church and the Church, the People of God.  Care to give it a shot?