The doctrine of temporal punishment due to sin, is one of those doctrines that I am curious why the Orthodox ceased to accept this revealed truth. It is explicitly taught in the Fathers and is explicitly taught in Scripture as well. There are reasons why the early Church even in the Ecumenical Councils assigned "penances" upon those who committed grievous sins, and some of these penances were quite long.
We also believe that there are natural consequences to sinful acts that one would consider punishment for sin, but we also believe that God does at times impose punishment upon us, for our sins even when we are forgiven. David loosing his son, due to adultery is one example; Moses and Aaron not being allowed to enter the Promise Land is another example. In both cases they were forgiven for their sins against God and in both cases they still received punishment for their sins.
Its not necessarily payment, but rather satisfaction. St. John Cassius said:
You see then what great means of obtaining mercy the compassion of our Saviour has laid open to us, so that no one when longing for salvation need be crushed by despair, as he sees himself called to life by so many remedies. For if you plead that owing to weakness of the flesh you cannot get rid of your sins by fasting, and you cannot say: My knees are weak from fasting, and my flesh is changed for oil; for I have eaten ashes for my bread, and mingled my drink with weeping, then atone for them by profuse almsgiving. If you have nothing that you can give to the needy (although the claims of want and poverty exclude none from this office, since the two mites of the widow are ranked higher than the splendid gifts of the rich, and the Lord promises that He will give a reward for a cup of cold water), at least you can purge them away by amendment of life. But if you cannot secure perfection in goodness by the eradication of all your faults, you can show a pious anxiety for the good and salvation of another. But if you complain that you are not equal to this service, you can cover your sins by the affection of love. And if in this also some sluggishness of mind makes you weak, at least you should submissively with a feeling of humility entreat for remedies for your wounds by the prayers and intercession of the saints. (St. John Cassius, Conferences XX, Ch VIII)
So what St. John Cassius writes is that God gives us many means by which we can make satisfaction for the sins which we commit, so no one is can claim that they cannot do so. If you are interested in knowing more about this he wrote a very interesting document on the subject of Repentance and Satisfaction that you may want to read. It is his Conference XX. Let us not forget that he learned at the feet of the Egyptian Desert Fathers.
Here I make a few comments.
1) I will give you an example: If I stole a bike from a neighbor, and later felt remorse for doing so, confess my sins to my priest, but decide to keep the bike instead of giving it back to my neighbor, am I forgiven?
2) Much of what you wrote about what happens after death is the doctrine of purgatory. Purgatory (and it seems that we do this frequently) is not very complicated.
3) Either believe that the prayers for the dead do something for them or you don't. We know that prayers for the damned do not help them, because they are beyond our help, and this is what the Fathers also taught. We know that prayers for the Saints do not help them, because they don't need our prayers, and this also is taught by the Fathers. Then why do we believe our prayers help the rest? The Fathers did teach on this if that help you.
Here is why we believe that one suffers in Purgatory, and I will quote St. Gregory of Nyssa here for he says it so much more elegantly than I can:
But while He for a noble end is attracting the soul to Himself, the Fountain of all Blessedness, it is the occasion necessarily to the being so attracted of a state of torture. Just as those who refinegold from the dross which it contains not only get this base alloy to melt in the fire, but are obliged to melt the pure gold along with the alloy, and then while this last is being consumed the gold remains, so, while evil is being consumed in the purgatorial fire, the soul that is welded to this evil must inevitably be in the fire too, until the spurious material alloy is consumed and annihilated by this fire. If a clay of the more tenacious kind is deeply plastered round a rope, and then the end of the rope is put through a narrow hole, and then some one on the further side violently pulls it by that end, the result must be that, while the rope itself obeys the force exerted, the clay that has been plastered upon it is scraped off it with this violent pulling and is left outside the hole, and, moreover, is the cause why the rope does not run easily through the passage, but has to undergo a violent tension at the hands of the puller. In such a manner, I think, we may figure to ourselves the agonized struggle of that soul which has wrapped itself up in earthy material passions, when God is drawing it, His own one, to Himself, and the foreign matter, which has somehow grown into its substance, has to be scraped from it by main force, and so occasions it that keen intolerable anguish.
Then it seems, I said, that it is not punishment chiefly and principally that the Deity, as Judge, afflicts sinners with; but He operates, as your argument has shown, only to get the good separated from the evil and to attract it into the communion of blessedness.
That, said the Teacher, is my meaning; and also that the agony will be measured by the amount of evil there is in each individual. For it would not be reasonable to think that the man who has remained so long as we have supposed in evil known to be forbidden, and the man who has fallen only into moderate sins, should be tortured to the same amount in the judgment upon their vicious habit; but according to the quantity of material will be the longer or shorter time that that agonizing flame will be burning; that is, as long as there is fuel to feed it. In the case of the man who has acquired a heavy weight of material, the consuming fire must necessarily be very searching; but where that which the fire has to feed upon has spread less far, there the penetrating fierceness of the punishment is mitigated, so far as the subject itself, in the amount of its evil, is diminished. In any and every case evil must be removed out of existence, so that, as we said above, the absolutely non-existent should cease to be at all. Since it is not in its nature that evil should exist outside the will, does it not follow that when it shall be that every will rests in God, evil will be reduced to complete annihilation, owing to no receptacle being left for it? (St. Gregory of Nyssa On the Soul and Resurrection)
In my opinion it just makes sense anyway. The sins which are our predominate faults are hard for us to get rid of because quite frankly there is a part of us that loves those faults. Loosing something that we love to do is extremely hard and painful is it not? For an extreme example of this think about the pain that a drug addict normally goes through when trying to get clean. Look at how difficult it is for an alcoholic to quit drinking. The deeper one falls into a predominate fault the harder it is for that person to pull out of it even with help.
Then you throw in the fact that one in the state of purgation knows that what they have done has pushed them further away from God, and it is going to take them longer to get to see God face to face. The pain of guilt and shame that we chose something over our Creator, should be overwhelming. So yes I can see purgatory being very painful. As sinful creatures we are, knowing what we know right now about the crucifixion, if we where shot back into time to that day of Redemption and were allowed to stand before our Lord on the cross, realizing that He is upon that cross because of me and what I have done....yes there is great pain and anguish, and should be by those in purgatory, as there should be among us before going to purgatory.
This is another doctrine of the faith that it seems that you guys have lost. The ECF definitely taught it, and Scripture also teaches it. Does it not say that Alms-giving covers a multitude of sins?
I'm really confused by this. This doctrine to me was the easiest to understand because it is based upon Justice. We cannot forget that God is a just God, not just a merciful one.