Karen, this is the direction I am heading.J.D.,
You quoted Dr. McMahon at length. His ultimate conclusion may be quite different than you think. He and many others who hold to the Regulative Principle DO observe Christmas. In all of its secular, cultural trappings.
This varies with the individual, but this can include trees, presents, lights, special food, singing secular seasonal songs such as "Frosty the Snowman".
What he and others of his opinion do NOT do is observe Christmas services in church or tie their celebration to the birth of Christ. Part of the reason is a belief of not "binding" the individual Christian's conscience to attend such a stated Christmas Eve service.
So ironically, while many Baptists of all types are busy trying to "reclaim" Christmas for its true meaning, many Confessional and Reformed types, some Baptists among them, are the greatest secularizers of all of Christmas. Their churches will be dark on Christmas Eve, but they will often be having a great party in which there are presents but no reference to the Incarnation.
I too hold to the regulative principle.