This is not inconsistent with our understanding of holiness. Catholics don’t believe we achieve holiness apart from the Grace God.
I think you are right, though, that we have a different understanding of human nature. The Reformers, especially Calvin, departed from the Apostolic faith in this matter, so all those who have been influenced by Calvanism (as it appears you are) have a distorted notion about humanity.
At a basic level, the RCC teaches the doctrine of Original Sin, so we can at least agree at that level. If you have ever read St. Augustine’s Confessions, the Reformed view is congruent with Augustine’s description of his own sinful nature as a child.
As you mentioned, the Catholic view acknowledges the necessity of God’s grace. The Reformed view is in agreement with this position also. The first point of divergence in our understandings is the extent of the depravity of human nature. The Reformed position takes a much sterner view of human nature than I think the RCC does. Is it a distorted view? Well, the Bible (and therefore God) also takes a pretty stern view of human nature. The Reformed understanding acknowledges that “from this original corruption, whereby we are utterly indisposed, disabled, and made opposite to all good, and wholly inclined to all evil, do proceed all actual transgressions.” This is perfectly in-line with what Scripture reveals about human nature:
Romans 5:6 “For while we were still weak, at the right time Christ died for the ungodly.”
Romans 7:18 “For I know that nothing good dwells in me, that is, in my flesh. For I have the desire to do what is right, but not the ability to carry it out.”
Romans 8:7 “For the mind that is set on the flesh is hostile to God, for it does not submit to God’s law; indeed, it cannot.”
Colossians 1:21 “And you, who once were alienated and hostile in mind, doing evil deeds,”
Gensis 6:5 “The LORD saw that the wickedness of man was great in the earth, and that every intention of the thoughts of his heart was only evil continually.”
Romans 3:10-12 “as it is written: ‘None is righteous, no, not one; no one understands; no one seeks for God. All have turned aside; together they have become worthless; no one does good, not even one.’”
Matthew 15:19 “For out of the heart come evil thoughts, murder, adultery, sexual immorality, theft, false witness, slander.”
Ephesians 2:2,3 “in which you once walked, following the course of this world, following the prince of the power of the air, the spirit that is now at work in the sons of disobedience – among whom we all once lived in the passions of our flesh, carrying out the desires of the body and the mind, and were by nature children of wrath, like the rest of mankind.”
James 1:14,15 “But each person is tempted when he is lured and enticed by his own desire. Then desire when it has conceived gives birth to sin, and sin when it is fully grown brings forth death.”
The second point of divergence, as you probably know, is in our understanding of how we are justified. The RCC teaches our righteousness is infused while the Reformed position argues that our righteousness is imputed. Is this a distortion? Well, it is by no means an obscure idea in Scripture. To the contrary it is prolific in the Scriptures:
Jeremiah 23:6, Romans 3:22-28; Romans 4:5-8, Romans 5:8-10, Romans 5:17-19, 1 Corinthians 1:30,31, 2 Corinthians 5:19, 2 Corinthians 5:21, Ephesians 1:7, Titus 3:5, Titus 3:7, Isaiah 53:4-6, Isaiah 53:10-12, Hebrews 10:10, Hebrews 10:14