Zebedee,
Hello, Hassan1

I'd like to respond to some of your points if I may.
1. I don't really take issue with that one.
2. Yes. But then, there are also forms of suffering that are completely unnecessary and serve no useful purpose whatsoever, such as people being killed in earth quakes and floods.
I would contend that earthquakes give the opportunity for good actions. And evil ones too, of course.
3. Enduring hardship can also produce some beneficial result in this life. However, the Islamic 'paradise' is only for good Muslims. Unbelievers and bad Muslims will enter Hell and spend at least some time being tortured horrifically. So, the suffering that bad Muslims and unbelievers endure in this life will be largely for nothing. It will not buy them access to paradise.
I will answer this in more depth later in the post.
And indeed, the fact that it is 'recompense' concedes that what this god does to people is, in fact, unjust. It is the necessary compensation for an injustice committed against that person.
Just as if a criminal were to destroy your property, they'd have to pay you compensation for the damage they did. Likewise, this god must pay compensation to the victims of his actions. But of course, the original act is still wrong, and it is not rendered moral simply by the paying of compensation to the victim. The act itself remains unjust even with the payment of compensation.
In addition to that, there is also the matter of the vast, vast amounts of suffering on the part of other sentient beings, that is, animals. But of course, these beings will not be compensated with an eternity of bliss, yet their lives are often ones of constant suffering and hardship.
Also, if this god is infinitely just, then how is it that a child who dies in infancy goes straight to heaven and yet an unbeliever who, as I stated, suffers and works through their whole life goes to hell in the end? Have they not earned more than the infant who died before it was even capable of truly valuing life?
Firstly, the Kufr going to hell may not be as clear-cut as some people try to make out. There will, of course, be instances where a man has never heard of Islam, let alone the prophet. He may have never read the quran, or been exposed to Muslims throughout his entire life. Is he to be condemed to hell for eternity for disbelieving in something he had no knowledge of? Al Ghazzali, a heavyweight in Islamic scholarship, dwelled over this very point. His analysis of the textual evidence led him to believe that even those blood-thirst crusaders, the ones who spent years at war with the Muslims, would not be held accountable for their deeds; yes, they had heard of Islam, but their knowledge of it was so distorted, that their actions, to them, would have seemed right and just. Hamza Yusuf alluded to something very similar; he mentioned in a lecture, that those who have no knowledge of our faith, or even a distorted knowledge, will be 'tested' on the last day. He quoted, I believe, a hadith in support of this. Similarly, those infants who died before reaching maturity, will also be tested.
And now for the Islamic theological issues.

[32:13]
And if We had so willed, We would have led everybody to his right path (by force), but the word from Me had come to pass: “I will certainly fill the Jahannam with jinn and human beings together.”This alludes to free will. He could have forced us all to be angel-like creatures, but chose to endow us with free will. We worship despite having the option not to. This is our distinguishing characteristic.
Volume 6, Book 60, Number 265:
Narrated Abu Said Al-Khudri:
The Prophet said, "On the day of Resurrection Allah will say, 'O Adam!' Adam will reply, 'Labbaik our Lord, and Sa'daik ' Then there will be a loud call (saying), Allah orders you to take from among your offspring a mission for the (Hell) Fire.' Adam will say, 'O Lord! Who are the mission for the (Hell) Fire?' Allah will say, 'Out of each thousand, take out 999.' At that time every pregnant female shall drop her load (have a miscarriage) and a child will have grey hair. And you shall see mankind as in a drunken state, yet not drunk, but severe will be the torment of Allah." (22.2) (When the Prophet mentioned this), the people were so distressed (and afraid) that their faces got changed (in color) whereupon the Prophet said, "From Gog and Magog nine-hundred ninety-nine will be taken out and one from you. You Muslims (compared to the large number of other people) will be like a black hair on the side of a white ox, or a white hair on the side of a black ox, and I hope that you will be one-fourth of the people of Paradise." On that, we said, "Allahu-Akbar!" Then he said, "I hope that you will be) one-third of the people of Paradise." We again said, "Allahu-Akbar!" Then he said, "(I hope that you will be) one-half of the people of Paradise." So we said, Allahu Akbar."
So, Hassan1, your god has knowingly and willingly brought about a state of affairs in which an incredible amount of human suffering will occur, even though he had the chance to do otherwise. He chose, rather, that unimaginable suffering was preferable to him than his forgiving people and/or leading them to his religion.
Allahs mercey takes precendence over his wrath. Whether or not the majority of people go to hell is imaterial; it was their own free will too disbelieve. They failed the test, and that is that.
And for what? His own praise and glorification? A completely frivalous and superfluous thing? Is such a god truly worthy of praise of any kind?