That was a long stimulating post. I did want to comment on a few things you said. You wrote about three so called conundrums. You state they provoked questions, “…however, the problem lies in the fact that there is no satisfactory clear cut, definitive answer set forth in scripture.” I believe all three are clearly explained in Scripture.
First, I believe you were referring to Romans 6:1, “What shall we say then? Shall we continue in sin, that grace may abound?” If you read on, Paul clearly answers that question in verse 2, “God forbid. How shall we, that are dead to sin, live any longer therein?” Sin is never good, but God often turns it around to produce good. Joseph was sold into slavery, thats bad. He later provided deliverance to his brothers when the famine came, thats good. Joseph’s brothers were morally wrong to sell him, but God turned it into good. There are many other examples.
Second you asked about why the devil gets to be punished. There are two ways to answer this. God did not make the devil sin. Satan was created as Lucifer, perfect. Lucifer chose to sin and so God will punish him. A second way to look at this is God is the creator. He made everything, he gets to make the rules. The pot can not ask the potter “Why did you make me this way?” Neither should we ask why God made a Lucifer who could sin.
Than you mention tares. Where did you get the idea they were created to challenge and sharpen His people? Tares are only mentioned in Mt 13. Christ explains that the wheat represents children of God, Christians. The tares are children of the wicked one, people that may look like Christians but are not. These tares will end up in Hell because of their sin.
Finally, you said you think the “great cloud of witnesses in Hebrews 11 are God’s favorites. I agree but would add that they are only part of His list of favorites. Every Christian is on His favorites list. Read Hebrews 11:39,40. After discussing the cloud of witnesses, the writer concludes by saying, “And these all, haveing obtained a good report through faith, received not the promise. God having provided some better thing for us…”