Whether a permanent life insurance policy (whole, universal, variable universal) achieves your goals better than alternatives methods of investing is heavily dependent on the terms of the policy.
The problem with asking about this in this forum is that most members of this sub know why permanent insurance may be a bad deal. Because they have seen how the numbers often don't work using such policies, they have not bothered to learn the ins and outs of exactly how such policies work. This explains some of your frustration in this thread (like regarding capital gains taxes for instance).
The truth is, such policies can work much as you describe and can be a good deal. They just often aren't a good deal because the math doesn't work out in comparison to other options. The premiums and internal fees are high and the returns are low. So nothwithstanding the tax benefits you mention, you end up putting in more money and get less out than using other vehicles.
For it to work better than alternatives requires the insurance payment portion of your premiums to be competitive with term policies, and the investment portion to achieve adequate returns also to be competitive with alternative investments. How those two factors interact will determine the worth of using insurance instead of a 529 plan.
I strongly suspect you would be better off with using a 529 plan for college savings, but you need to actually model out your different scenarios and compare them. You may actually have access to policies with terms that make sense. You may also simply prefer the certitude of the insurance policy terms to the risks inherent in other choices.
For what it is worth, I myself have several permanent life insurance policies, so I do not automatically discount their usefulness. Though mine are part of an investment plan focused on intergenerational wealth preservation and accretion. They are not really intended for children's college or retirement spending, though the cash balances are certainly available for those if it makes sense.