Cayce did not deny Christianity by outright calling it a false religion. His denial was that the "Christianity" he accepted denied the Christianity of Scripture (e.g., his view that Jesus was reincarnated many times with all these lives being struggles to achieve Messiahship in order to set an example for us to follow). He accepted the title (of Christian) but rejected its message in favor of a more Gnostic faith.
I think that there is error and then there is error which corrupts the gospel message. Christians should not be able to accept the occult. They shouldn't believe in reincarnation, in ghosts (grandpa Jed haunting the outhouse kind of ghosts), near-death experiences (people walking through heaven only to return and tell the tale), etc...because this is not only foreign to Scripture but it is opposed to its message. Some just accept those false doctrines without thinking it through. Others, however, put enough stock in those things that their understanding denies the gospel message that they claim to understand. Cayce (with his theology of the past lives of Jesus) falls into the latter category.
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