But the question is still there: if He can do ANYTHING and EVERYTHING then why is it necessary to show us love in such a painful way?
You're also forgetting God's omniscience. He's all powerful, but also all-knowing. I don't think this sentence is so much questioning the
power of God as much as it's questioning how he uses that power. We must realize, though, that for humans to understand God's ways is just about as reasonable as a cockroach understanding Einstein's ways.
He loves us and does not want us to suffer, yet many times we suffer. Why can He not just say, "Here is love. Here is mercy. Here is happiness."? This is how most Christians say He brought the universe into being: "Here is water. Here is earth. Here is light. Here is life." Why can't He just do the same with us? "Here is salvation. Here is knowledge. Here is eternal life for all." If He is really all-powerful then why do people go to hell? Can't He just make them righteous?
This is when you come into the problem of evil, and the answer is free will. God isn't just going to "make" someone be righteous, since if God forces someone to be righteous, that person is not truly righteous at all, since he has no choice in the matter. There's no reason to praise someone for being righteous if they really had no other choice. Similarly, there's no reason to condemn someone for being unrighteous if they had no choice but to be unrighteous.
God has given people free will, and there's nothing wrong with free will in and of itself. In itself, it's morally neutral (much like a hand is morally neutral). The pivot point comes in how you use what you've been given. Some people use their freedom to reject God while others use that same freedom to accept Him. Without free will, true love cannot exist. Forced love is not love at all, but rape.
But couldn't we exercise our free will this way?:
God: "Do you want to be happy?"
Anyone: "Yes."
Ah, and here's the misconception a LOT of humans have. People seem to think for some odd reason that our purpose of living is happiness. People see it as an unconditional right. This is not true. Show me in the Bible where it talks about God's main concern being the happiness of His people. Happiness may be a good thing, but when it comes to God and His purposes, it's the top priority. The top priority demonstrated in scripture time and time again is God's desire for people to come to know Him. Now whether people come to know more of God through disaster or pleasure is only a means to an end, that is, getting to know God.
Furthermore, I think that without evil, we would not truly know what "good" is. "Good" would be a word without meaning to us, just as if there were no light in the universe and therefore no creatures with eyes, we should never know it was dark. Dark would be a word without meaning, since we would have never known light to say that there is none. Knowledge of what good really is would appear to be a fortunate side effect that emerges from having to deal with people's rejection of God and His ways (people using their free will).