I'm probably going to regret posting a reply to this as I find that conversations with most atheists on these topics seem to go nowhere, but here is another perspective.
Ned, I hope you know by now that I am not your "typical" atheist, in fact, I take pride in the fact that I am not a typical anything.
But I know what you meant. I've witnessed atheism become a dogma in and of itself for some people, and I am by no means a dogmatic atheist (or at least I don't intend to be). Atheism is for me, a *starting* point for a deeper understanding of the world, not an end point.
The reality is that in the real world as it is today, theists are causing way more problems than atheists and part of why I call myself an atheist (a recent development in my personal mythology I might add) is specifically to stand in solidarity with those who are actively working to dilute the overwhelming power that theism has amassed due to generations of institutionalized dogmatic teachings.
The problem of evil is a very serious problem if God is "extra-cosmic", i.e. completely separate from his creation.
Before I go further, I'd like to point out the simple fact, which I know you must already understand, that the "extra-cosmic" GOD *IS* the god of monotheism and most religions in general.
However, what if creation is the result of the willing self-limitation of a Divine Reality, i.e. if God is both transcendent and immanent (panentheism)? In that situation what you get is not a scenario in which a tyrant external God sits around doing nothing while inflicting suffering on his creatures, but a scenario in which the One existence limits itself in its own self-manifestation and self-evolution, takes on the appearance of this divided creation and seeks to rediscover itself and its original unity and harmony through each created being in a process of evolution. In short, according to this metaphysic, it is the Divine, behind the masks and appearances, that is bearing the evil and suffering of its creatures.
This is all great, as someone with pantheistic leanings (*not* panentheistic), I understand what you are saying completely. What you call "Divine Reality" I call Consciousness which is the very being inside me that is gives "me" a sense of cohesiveness day after day even though no cell in my body is the same as it was 10 years ago. This Consciousness is what, I find, is common in things like Art, Sex, Music... expressions of a shared consciousness that some talented beings are able to put into mortal terms for our ego-based reality within which our consciousness manifests.
The question is now a totally different one. The problem is not that God inflicts evil on his creation which is separate from his own being, but how, and more importantly WHY, the Divine Reality came to limit itself and impose cruelty, evil and suffering on ITSELF in an act of self-sacrifice. Cruelty to others is one thing but it is quite another for the sole Reality to apparently inflict pain willingly on itself with a view to rediscovering its original Oneness through its self-evolution.
That is the limit of pantheism and panentheism because no sentient being would willingly hurt itself. The whole concept of "sacrifice" or "self sacrifice" is really not my cup of tea as I have seen what happens when sacrifice becomes glorified as a concept in and of itself (e.g. the worship of sacrifice among Shias, Catholics, etc.)
This is a vision of a self-creating, self-organizing, self-evolving universe. This idea is found in Indian, Greek, Egyptian, and many other philosophies.
Having studied pagan cultures of Europe (Celtic, Norse, Greek, Roman, Etruscan, etc), Asia (Buddhist, Hindu, Zoroastrian etc), Africa (Egyptian, among other tribal faiths), and America (Shamanic, Native, Aboriginal, Mayan, Peruvian), I absolutely see the point of relating human experience to the natural scheme of the universe. The ancient paths all did speak of universal reality as a living, self organizing entity of which we are all part (worship of Natural elements, witchcraft, etc. were part of these spiritual traditions).
My aim was not to start an argument here but to show there have been some very interesting and out-of-the-box responses to the problem of evil by mystics.
Yes, we can sit and pontificate on the consciousness of nebulae and the orgasms of event horizons, but the truth is that god-based, anthropomorphic, for the most part MONOtheistic religion has wreaked horrors on countless humans and
is still doing that right now. The idea of a god-entity sitting somewhere outside of our reality is not comforting to people whose brains have been molded by monotheism and theism in general to *want* a parental figure to come and *save* them from the harsh realities of life.
I personally do not believe in the dualistic notions "good" and "evil" in the way that religion (any religion) would have me believe. I *choose* to find my own truth beyond the grasp of any one religious or non-religious dogma.
The bottom line though is that most humans are not looking for a neutral, passive force that keeps atoms together to be "god". Most humans are looking to A GOD to come and give them answers... human answers. That is what is wrong with religion. It hijacks our innate sense of "spirituality" or consciousness and tries to elevate the human being as the most superior of all the universe's creation and worthy and deserving of eternal life. I simply do not believe that humans are all that special, frankly, and our religions are just proof of that.
There is no doubt that there is immense suffering in the world, and planet earth certainly seems to be a center for such suffering (think of the cruelty in nature for instance ... how much animals suffer because they are tied to their biological instincts ... you can't expect a tiger to give up meat, now). But is there an eschatology or teleology here? Is there a point to the evolution of the universe?
Have you considered the very real possibility that there is
NO point at all? That's the place I begin from. I give it a point, I ascribe meaning to my life. Just like to a hardcore Muslim, the meaning of life IS to follow Islam. That IS his meaning of life not because there is a meaning to life but because he *chose* to believe that. To a Buddhist the meaning of life is to follow in the footsteps of Buddha (to ultimately attain enlightenment, but never in this life).
To *want* to see a "point" to the evolution of the universe is to ascribe anthopomorphic attributes to the entire universe.
Can I find out why I suffer and whether my suffering has any ultimate purpose? Can my suffering be made a willing sacrifice (mirroring what might have been the original sacrifice of the Divine, the result of which was creation and you and I) and can it be transformed into the sheer delight of existence?
I do believe in delighting in all forms.

I don't like labels, but if I had to I'd say I'm more of an Existentialist-Hedonist than a cut and dry "atheist", if that can even be defined.
From the Big Bang arose matter, from matter arose life, and from life arose mind. And from mind, what might arise? After man ... what? What singularities lie ahead?
Good questions. It's important to remember that we are after all human and that we will never, ever understand everything. I find a humble delight in knowing that I can look forever and never run out of new things to learn, discover, explore.
I might be wrong about many things, but to stop asking questions like these is death.
Never ever stop questioning.

It's one of the very few worthwhile reasons to enjoy being part of humanity.
