Evolution or Design?

Look at this guy.  He's gorgeous!  I noticed him on my back windshield as I was driving to work this morning.  He was hanging on for dear life, but somehow made it.

When I was able to check him out close up, I was stunned at the level of detail of his wings.  It looks so much like a leaf, right down to the little veins.  Absolutely amazing.

So how did this species come to look the way that it does?  This particular bug had parents, and those parents had parents, and onwards back through time.  This much is universally agreed upon, I think.

I see only two options:

1)  This species is descended from ancestors.  These ancestors looked different than this current species.  The ones that happened to be born with variations that made it look more like a leaf happened to be more successful at reproducing.  Over a long period of time, and repetitive selective pressure by predators, we now have this bug that looks very much like a leaf.  Other offspring from the same ancestor may have developed other variations, and over time evolved into different cousin-species.  If this is true, then we might predict that the DNA of this bug and other bugs would be very similar, and with enough samples, we could even come up with a little family tree of who is related to whom and how.

Something like this:

Let’s review some facts.  There is variation within species.  Children are not exact duplicates of parents.  Each new generation can introduce tiny little minor variations.  This is observable and reproducible and predictable.

Another fact is that the way something looks or behaves has an effect on how well it can live long enough to reproduce.

Another fact is that genetic information is passed from parent to child.

Isn’t that’s all that’s needed to explain how a bug can change over time to look like a leaf?

The only other option, if this species did NOT evolve gradually over time from something different, is that it has remained constant.  I don’t think there’s another choice.  Either this guy’s distant ancestors looked exactly the same, or it was different.

If it was exactly the same, then it’s not related to its various cousins like in the picture above.  All those lines should be straight and parallel, and never touch.  Grasshoppers and crickets are not cousins, descended from a common ancestor.  They are wholly distinct, and always have been.  I believe this is the creationist view.  Animals do not evolve.  Parents of a kind of thing give birth to children that are the same thing, and that repeats over and over.

If this is the case, then I think that means that we should find all kinds of animals in all the various strata of the earth’s layers.  If a horse has always been a horse, then horses and dinosaurs should have existed at the same time.  Right?  Same with all modern species.  If a rabbit has always been a rabbit, then we should find rabbits in any rock, no matter how old it is.  I’m wracking my brain to find some other way it could happen.  If rabbits only ever gave birth to rabbits, and rabbits ancient ancestors looked exactly the same as modern rabbits, then it must be rabbits all the way back.

To put it more strongly:  If a mammalian fossil was found in rocks that were older than a certain age, that would absolutely flip the theory of evolution on its head.  It would be Nobel-prize winning stuff, and certainly go down in history as a historic discovery. 

But has never, ever happened.

What am I missing?