The problem with calling the good work evil in this scenario is, I'd argue, a lack of what Lutherans call the distinction between Law and Gospel, and the distinction between the two kinds of righteousness. The Lutheran tradition emphasizes that there are two kinds of righteousness: Righteousness before God, which is called a passive righteousness because it is something one receives not something one does; and Righteousness before the world/before human beings, which is called an active righteousness because it is something one does rather than receives.
When someone--an atheist or a Christian, it doesn't matter--helps a little old lady across the street it is an active righteousness. It would be silly to call that evil when the little old lady has benefited. It certainly wasn't evil to her, it certainly wasn't evil before our fellow human beings. But neither would it be righteousness before God. And on this I think it's important, I'm not saying that God looks at the act and says, "Not good enough, little worm"; I'm saying that if I wanted to brag about it God wouldn't be impressed by me bragging and boasting. And, even more importantly, I don't have to brag and boast or try and impress God. God doesn't need me to impress Him. That's the point. The point isn't "You're not worthy of my love", the point is "I already love you and you don't need to earn it." Thus the passive righteousness is God saying, "You don't need to earn my love, you already have it: Here it is, for you." This is also why Lutherans speak of objective justification, that Jesus' death and work to redeem the world wasn't so that people could, if they crossed their t's right and dot their i's correctly, escape wrath and get a good afterlife. But that Jesus has already justified all (we look to Romans 5:18 as an example of this).
It's not about me having the right beliefs, the right ideas, the right thoughts, the right deeds, the right set of X, Y, Zs. It's that God already loves me, God has already accepted me in Jesus long before I was even around. When I say I deserve "death and hell", I'm not saying God thinks I deserve death and hell, or that I need to impress God and love Him or please Him or whatever in order to avoid a bad afterlife. I'm saying I bear guilt for what I do (the Law), but that God says "What guilt? You're righteous." (Gospel). God says this not on the basis of what I say, do, or believe; but on the basis of Jesus and what Jesus says and does. God doesn't say this in response to my faith; God says this and that gives me faith. I.e "subjective justification", through faith which I receive I believe God when He says, "I love you, you're forgiven."
I would also add: I don't think anyone deserves to be locked in a basement to be tormented for eternity. Nor do I believe anyone will.
-CryptoLutheran