Were the 26 counties given?

I've only ever heard of both English and Irish parents taking their kids out of religion lessons and have never heard of any taken out of history lessons, it seems more than odd.

I tink she's probably right. The only thing she got wrong was that it was British not the English who gave Collins & co the Free State. If we had any say the boundary commission should put South Armagh, large chunks of Tyrone & Fermanagh & Derry City to the Free State. The British also armed the Free State Army with 27,400 Rifles, 246 Lewis LMGs, 6,600 revolvers, 5 Vickers HMGs, 3,504 grenades, and 10 18-pounder artillery pieces.

I always wondered, maybe someone could explain, why the British just didn't give the 26 counties the Irish Republic, 15 years later in 1937 the counties became a Republic in all but name. The civil war/counter-revolution was fought over the status of the 26 counties, why were the British so against a Republic in 1922 and seemingly not bothered about 1937 & 1949 when a Republic was officially declared?

Difference is your family live in England where as the family the OP is referring to live only in his imagination.

The belief that "the Irish were given the 26 counties as a reward for the Great War" is definitely not right. If the British had wanted to "reward" the Irish for the Great War in this way, the War of Independence would hardly have been necessary. Plus, of course, the idea of carving off the 6 counties and delivering home rule only to the 26 predates the Great War.

As for why the British insisted on dominion status for the 26 counties in 1922 but were seemingly unbothered when that was largely dismantled in the 30s, there are a few factors at work, but the main thing is that the British concept of dominion status had itself evolved in the meantime.

In 1922 the idea was that dominions had internal self-government under the oversight of a governor-general who was appointed by the Westminster government. Internationally, though, Dominions were considered to be a part of the British Empire and they were represented by the UK.

But this started to break down quite quickly — e.g. in 1924 the League of Nations started to admit the Dominions as members separately from the UK. And in 1926 an inter-governmental conference in London declared that the Dominions were "autonomous communities within the British Empire, equal in status, in no way subordinate one to another in any aspect of their domestic or external affairs, though united by a common allegiance to the Crown and freely associated as members of the British Commonwealth of Nations".

In 1931 the Statute of Westminister deprived the UK parliament of its residual right to legislate for the Dominions. Somewhere around this time the practice of the Westminster government nominating governors-general came to an end; the governor-general of each Dominion was nominated by that that Dominion's government.

There was an awareness in London that all this would enable Ireland to change its relationship with, and place in, the Commonwealth, and to dismantle large parts of the Treaty. But that was a relatively small issue; the British were much more interested in Canada and Australia (and, for the more far-sighted, India, which was already on a track likely to lead to Dominion status). The British knew that they could keep none of these places by force, so they had to keep them happy. The terms of Dominion status were developed with an eye to keeping them on-side; if they didn't have sufficient autonomy within the Empire/Commonwealth then they might wish to leave, which the British very much did not want, but could not prevent. The Irish Free State was small beer by comparison with these considerations. Hence the British conceded the Dominions, inlcuding the IFS, the legal right to expand their own autonomy and sovereignty and, when De Valera came to office in 1932 he took that ball and ran with it hard. And the British let him because (a) they couldn't do anything about it anyway, and (b) attempting to stop him would have sent all kinds of wrong signals to dominions that mattered far more to them than the IFS did.

I don't think were given it as a reward for WW1. We were given it because the place like Palestine/Israel became more trouble than it was worth. 

If that is your view, you shouldn't have said, of the view expessed the OP, "I think she's probably right." You should have said "I think she's completely wrong."

And people like O'Higgins, Griffith, and Cosgrave had no problem in joining/re-joining the Empire if they got their fair share of reward from it, like Gratton's Parliament.

O'Higgins during the debates said…

"Yes, if we go into the Empire, we go in, not sliding in, throwing dust in your people's eyes, but we go in with our heads up"

By 1926 there was more ex-Clongowes boys in the cabinet than vetrans of 1916.

If you take the trouble to read the O'Higgins speech from which you selectively quote, you'll see that he wasn't presenting "going into the Empire" as a good or desirable thing. He was explicit about the fact that it was a bad thing, and that it was being forced on Ireland against its will by the threat of war.