It isn't. Here are 3 reasons why:
1. For a start, knowledge of other faiths does not necessarily lead to a reduction in friction between faiths. In fact, often the most vicious and violent religious conflicts are between groups with detailed knowledge with what the other believes, e.g. Catholic vs. Protestant; Shia vs. Sunni. Mere knowledge of other faiths does not produce tolerance and respect. Actual interaction with members of other faiths (and none), on the other hand, probably does have a beneficial effect.
2. Mere knowledge of other faiths, in the absence of any robust critical thinking about faith, often also promotes a very intellectually flabby sort of relativism. Pupils presented with a range of faiths are likely to realize that, as these faiths all contradict each other, most of them (perhaps all of them) must be largely false. Teachers who want to avoid endorsing this conclusion may be tempted to sidestep the issue by taking a relativist stance: "Well, that Jesus is God is true for Christians, but false for Muslims". Relativism conveniently makes the religious beliefs of all believers come out as "true"!
3. Most importantly, unless children acquire the sort of critical thinking skills and robust intellectual defences that I'm arguing all schools, religious or not, should foster (and which traditional religious eduction often works so hard to suppress) schools provide the perfect, gullible fodder for the charlatans, snake oil salesmen, cultists and religious zealots waiting outside the school gates.