I have similar thoughts.
God being both omniscient and omnipotent would make free will seem like an illusion.
Everything we do in the context of our [god-given] free will, should work towards fulfilling his divine plan.
He knew what we were going to choose to do.
It's not that he lets it happen that makes him ill-willing, but that he planned it from the very beginning.
I haven’t really mentioned the problem of free will, because in the end it doesn’t matter. You only have to focus on two issues; Omniscience and most-merciful, you only need those two.
The prophet himself said the next thing about gods mercy:
Umar ibn Al-Khattab said: Some captives were brought to the Messenger of Allah and there was a woman among them whose breasts were full of milk. Suddenly, this woman saw an infant in the midst of the captives. She took hold of it, brought it into her bosom, and started nursing it. The Prophet then told the Companions, "Do you think that this woman would throw her child in the fire?" We said, "No, By Allah she would not, if she is able not to." He then said, "Allah the Exalted is more merciful with His slave than this woman with her child." (Al-Bukhari).God knew when he ordered the Pen to write everything 50.000 years before creation, that a kaafir (X) would go to hell for eternity, even by the kafirs own “free will”. That’s not merciful of him if he creates a kaafir that is going to end up in hell for eternity. God knew that (omniscience) and still creates the kaafir, that’s not most-merciful.
That’s a huge contradiction that no one has ever solved. In the end they all resort to free will. But free will is not the issue, but the contradiction of omniscience and most-merciful.