To understand Orisha worship and traditional african religion is to understand that ancestors are a critical part of our lives. The Yoruba say we stand on the shoulders of those that come before us. This is an important idea to which I would add, whether those people were of good or bad character. This is important because even people who've made bad choices can be learned from, so that we hopefully don't make the same ones.
How does one determine who to worship? Well, there are several avenues that can be utilized to determine this. First is simply following your family tree, and making sure that you are giving praise to your bloodline. To this, you may choose to add your extended family (those who've passed and were close to you, but may have not been related by blood). If you belong to an Ile (house), Egbe etc, you may add to this your extended spiritual family that has passed, specifically priests from that lineage. Should you not know these people, it is always acceptable to seek advice through divination to determine which ancestors need attention.
Where this gets complex is in dealing with those ancestors who may have had questionable ethics, or were just bad people. Some suggest that when a person departs from this life, they retain their evil character, so why give them praise. First, we are not giving praise to the things that they did in life (though we can for those that were good people), we are giving praise that they are our ancestor and without them we would not exist, and we are praying that they may have guidance in choosing good Ori in their next incarnation.
A person's character can not remain the same after disengaging from the body. If that were the case, all wicked people would always remain wicked, and we know that not to be the case. People reincarnate, and their Ori choses it's destiny at the foot of Olodumare, I have to believe that the soul does understand it's wrongs in life, and that it doesn't continue to chose wickedness over and over (or at least at some point in the cycle it realizes). Now fulfilling the promise of a good life is another problem? Choosing the righteous path and walking the righteous path are sometimes two different things.
I also believe it is not for us to judge the outcome of someone's life, that is the place of Olodumare, Ifa and Orisa since only they can see the sum total of one's existence weighing out the many complex decisions we as humans may have never seen. Sometimes honorable people do dishonorable things, and part of restoring their honor is making amends, realizing what they've done, and changing, hopefully in this lifetime (though this certainly doesn't always happen).
Life is not always simple, and often there is grey. The color of someones skin does not automatically make them honorable, and flipside, it doesn't always make them dishonorable either. This is where the past becomes murky. I believe true traditionalists would say that you must teach your children the whole truth about their ancestry, and you should pay homage to all your ancestors. This does not mean that a child needs to take the religion or practices of all their ancestors, but they should know about them. In our increasingly mixed society, a parent still has a responsibility to raise a child within the system they feel is right, though eventually the child needs to choose for themselves.
Each of us is born with Ori, and our Ori will lead us to what our path is, and in part we are not a missionary religion, because we believe that Ori chooses it's path. To that end, it may or may not be the path of that child to follow Orisha, we can teach them about it, but in the end they must choose. It is I believe our responsibility to teach our children about all of their ancestors and ancestry, and let them choose.
I will tell my children about their spanish great grandmother, their Kuna indian great grandmother and their jewish great grandparents. This is the new world of pluralism that we now live in. I will also teach them about the Orisha, and if they want to learn more about the Kuna, or the spaniards, or the jews I will learn with them.