First off, you've raised some excellent contentions, this will be hard to respond to and I hope you read it.
You've just described the Augustinian Theodicy, Augustine holds firmly to the Hebrew-Christian conviction that the universe is good - that is to say, it is the creation of a good God for a good purpose. There are, according to Augustine, higher and lower, greater and lesser goods in immense abundance and variety; however, everything that has being is good in its own way and degree, except insofar as it has become spoiled or corrupted. Evil has therefore not been set there by God but represents the going wrong of something that is inherently good.
As it originally came forth from the hand of God, then, the universe was a perfect harmony as the first book of the bible suggests. The 64,000 dollar question is, then, how did evil come about? It came about initially in those levels of the universe that involve free will; the free will of the angels and of human beings. We all know what happens. Therefore, this fall of angelic and human beings was the origin of moral evil or sin. The natural evils of disease, famine, earthquakes, etc. are the penal consequences of sin, however the distinction between, and problems with, natural and moral evils I'll leave be.
The Augustinian theodicy adds, as you believe, that at the end of history there will come the judgement , where many will enter into eternal life and many others (who have exercised their free will and rejected God's offer of salvation) into eternal torment. Augustine concludes that since there is happiness for those who do not sin, the universe is perfect; and it is no less perfect because there is misery for sinners; the penalty of sin corrects the dishonour of sin. Here, he is invoking a principle of moral balance according to which sin that is justly punished is thereby cancelled out and no longer regarded as marring the perfection of God's universe.
The purpose, and problem, with this argument is to clear the creator of any responsibility for the existence of evil by loading that responsibility without remainder upon the creature, us. Evil stems from the culpable misuse of creaturely freedom in a tragic act, of cosmic significance, in the prehistory of the human race.
I hope that is theoligically accurate so that my following objections make sense.
The basic criticism of this theodicy, the most steadfast and common theodicy of Christianity, is directed at the the idea that a universe which God has created with absolute power, so as to be exactly as God wishes it to be, containing no evil of any kind, has nevertheless gone wrong. It is true that the free creatures who are part of it are free to fall. However, since they are finitely perfect, without any taint or trace of evil in them, and since they dwell in a finitely perfect environment, they will never in fact fall into sin. Thus, it is said, the very idea of a perfect creation's going wrong spontaneously and without cause is a self-contradiction. It amounts to the self-creation of evil out of nothing! Not even Augustine had the answer for why some angels, in particular one, fell by their apparently evil will.
The basic criticism, then, is that a flawless creation would never go wrong and that if the creation does in fact go wrong the ultimate responsibility for this must be with its creator, for God is where the buck stops. Considering it was logically possible for God to have created free beings who would never in fact fall, this is a significant criticism of the Augustinian Theodicy. Another theodicy, the Irenaean Theodicy, argues that although God could have created bengs who were perfect from the beginning finitely perfect, God has not in fact done so because such beings would never be able to become free and responsible sons and daughters of God. For this post, I'll remain on the Augustinian Theodicy.
A second criticism, made in light of human knowledge, is that we cannot today realistically think of the human species as having been once morally and spiritually perfect and then falling from that state into the chronic self-centeredness which is the human condition as we now know it. All the evidence...I repeat, evidence...suggests that humanity gradually emerged out of lower forms of life with a very limited moral awareness and with very crude religious conceptions. Again, it is no longer possible to regard the natural evils of disease, earthquakes, and the like as consequences of the fall of humanity, for we now know that they existed long before human beings came upon the scene.
The arguments a priori and subsequently a posteriori above are common responses to the Augustinian Theodicy, your apparent position alongside your christian brethren. However, there is one more criticism I'd like to raise: The eternal torment in hell, a fate that awaits a large proportion of the human race, including yours truly. Since such punishment would never end, it could serve no constructive purpose. On the contrary, it is said, it would render impossible any solution to the problem of evil, for it would build both the sinfulness of the damned, and the nonmoral evil of their pains and sufferings, into the permanent structure of the universe; the creation of a good god, for a good purpose, I think not.
