A Torah scroll contains 304,805 letters, each handwritten in black ink on parchment by a highly trained scribe. If a single letter is missing or deformed, the entire scroll is unfit for use.
Another important law regarding the Torah scroll is that each of its letters must be ringed by a blank strip of parchment. Should a letter touch its fellow even by a hair, thereby violating the "white space" between them, again, the entire scroll is disqualified from use until the error is corrected.
Every Jew is a letter in G‑ds scroll. Our sages tell us that if a single Jewish soul had been absent from Sinai, the Torah could not have been given to us. The people of Israel comprise a single, interdependent entity; the lack or deformity of a single Jewish soul, G‑d forbid, would spell a lack or deformity in us all.
But equally important is the inviolable "white space" which distinguishes each and every one of us as a unique individual. Often, a strong sense of community and communal mission obscures the differences between its members, blurring them to a faceless mass. Says the Torah: true, my hundreds of thousands of letters spell a single integral message. But this message is comprised of hundreds of thousands of voices, each articulating it in its own particular manner and medium. To detract from the individuality and uniqueness of one is to detract from the integrity of the collective whole.
Freely adapted from the works of the Lubavitcher Rebbe,
Rabbi Menachem M. Schneerson, of righteous memory.

You are right! Not Confused. Your are right in your conclusion "we are all deformed" if you follow the logic to one of two possible conclusion.
However, is not the positive also true? We are complete?
You make the assumption that "deformity" is equated with lack of observance and the "lesser" movements, however the quote makes no allusions to that.
Assume for a moment the quote is only talking about "ORTHODOX" observant Jews. Are there no differences among "ORTHODOX"?
The most important assumption in this statement is this: "if a single Jewish soul had been absent from Sinai, the Torah could not have been given to us"
According to this there could be no deformity. There was not one lacking or deformed we are complete, otherwise the Torah could NOT have been given to a "deformed", "lacking", Jewish People.
The Torah was given therefore Individuality and difference is vital to completing the whole. We share in that completeness. Difference is not deformed mispelled.