The other day I was singing "The Spirit of God," which at one point says "the knowledge and power of God are expanding." Wait. If they're expanding, that means they're not infinite! So we have an LDS hymn that basically states that God is not omniscient or even omnipotent. This makes God easier for me to understand, because otherwise, why would They put Their son through all that suffering if They could just change the rules with all Their omnipotence. God's desire to rear little souls makes more sense to me this way too, because then our experiences, when exalted, can expand the knowledge and power of God (maybe too much of a stretch?). God knows all the rules of the physical and metaphysical universe, but maybe They didn't make them, and at least can't break them. So the answer to my question of "why would God make such a ridiculous rule about the price for repenting of sin?" could be "God didn't make that rule."
There's a great speech by BYU's Dr. Paulson on the problem of evil that my sister recommended to me. In it, Paulson states:
[Joseph Smith's] revelations circumvent the theoretical problem of evil by denying the trouble-making postulate of absolute creation—and, consequently, the classical definition of divine omnipotence. Contrary to classical Christian thought, Joseph explicitly affirmed that there are entities and structures which are co-eternal with God himself. On my reading of Joseph’s discourse, these eternal entities include chaotic matter, intelligences (or what I will call primal persons), and lawlike structures or principles. According to Joseph Smith, God’s creative activity consists of bringing order out of disorder, of organizing a cosmos out of chaos—not in the production of something out of nothing.Basically, he's saying that, according to Joseph Smith, God didn't create the world ex nihilo, but that he organized it out of existing matter (although there's still the question of where that matter came from). My husband Adam and I were talking about the limits of God's powers--there are all sorts of quotes about how God has power over all the earth and is outside of time--but there's room for interpretation in it. God knows our thoughts, God knows everything on Earth, God can make stars and planets, and "all things." But perhaps there's room for God to be "bound," not just by when we keep covenants, but in other situations like how Jesus had to suffer for all of our sins, and how God cannot look upon sin with the "least degree of allowance."