the separation of self

So, since my junior year of college (96-97) I've kept up a study of philosophy from time to time. Over the past 6 years I've gotten pretty into the eastern stuff, and a lot of it resonates with me, largely because it seems like the underlying truths to many western ideas as well (though those are so often cloaked in layers of interpretation and pointed vernacular). One of the big ideas that fascinates me is the notion that in the real reality, not the one that has passed through our sensory filter, we, all people, all things, all lack-of-things (space), and even time, are all connected, we are all one. In Buddhism, this is the essence of Buddha, in Taoism, this is the Tao (though in both cases my generic one-line description only scratches the surface of these 'beyond words' notions). As a side-note, there are some theories in physics that assert the same claim about the underlying unity of reality. So, with this whole parenting thing I've done a lot of reading and apparently babies are born without the ability to distinguish themselves from the world around them. There is no separation. They perceive everything as themselves. They also have no notion of cause and effect, which, of course, is another term for time... but yet they most certainly perceive. They can almost immediately distinguish between their mother and anyone else. They very deliberately move toward their food source and they are certainly aware of their physical needs. This state of awareness persists, apparently, for some time. This raises two (+) questions:

1) Are humans born Buddha (or whatever name you choose to use)?
2) How can one perceive without distinction between self and "other?" In particular, what is Mother to such a being? Assuming no sensory distinction between forms, what remains?