Justification: Does God Kid Himself?

In the December 8 daily devotion in My Utmost for His Highest, Oswald Chambers says: "God is justified in saving bad men only as he makes them good.  Our Lord does not pretend we are all right when we are all wrong.  The Atonement is a propitiation whereby God through the death of Jesus makes an unholy man holy."

That made me think of something that Robert Sumner talked about in his tome against Armstrongism, entitled Armstrongism: the "Worldwide Church of God" Examined in the Searching Light of Scripture.  Sumner was quoting Herbert Armstrong's characterization of the Protestant doctrine of justification by grace through faith alone and was criticizing Armstrong for mocking the doctrine.  According to Armstrong (as Sumner was quoting him), many Protestants believe that God "kids himself" by saying that believers are righteous when they really are not. And, indeed, I have heard Protestants say things that sound just like that: Luther saying that Christians are snow-covered dung, and evangelicals who maintain that, when God looks at believers, he sees the righteousness of Christ rather than their sins.

So did Armstrong not believe in justification by faith?  My knowledge on this is incomplete, but I'll share what I do know.  Armstrong certainly believed that Christ died for our sins and that we receive forgiveness through repentance and faith.  We celebrated Christ's death each year at the Lord's Supper, after all!  But Protestant cult-watchers have often criticized Armstrongism for teaching that God forgives us for sins past, not sins of the present and the future.  To be forgiven for sins of the present and the future, Armstrong (as he is characterized by Protestant cult-watchers) maintains, we have to confess and repent, and then the blood of Jesus Christ cleanses us of those sins.  This is different from saying that God has forgiven us at the moment of belief of sins past, present, and future, and that God looks at believers and regards them as righteous rather than as sinners, a notion that is known as positional righteousness.

On the other hand, I heard things in an offshoot from Armstrongism that sounded a lot like positional righteousness.  This offshoot retained certain teachings of Armstrongism, such as observance of the Sabbath and the annual holy days, the hope that believers will become divine beings as part of the God family, and the belief that Christmas and Easter are pagan and should not be celebrated.  So we're not dealing with an offshoot from Armstrongism that is evangelical.  Yet, I heard people there say things that sounded like a belief in positional righteousness----that God regards Christians as righteous, even though they are actually sinners.  They portrayed justification as God giving us an opportunity to learn, to grow, and to bear fruit, without having to worry about God condemning us each step of the way for our sins.  And I heard one sermon in which the preacher said that God looks at what we will become (righteous) rather than what we are.  

But back to Armstrong's statement (according to Sumner) that justification teaches that God "kids himself" that we are righteous when we are actually sinners.  Oswald Chambers said that God does not kid himself.  According to Chambers, God's not indifferent to our sins after we are saved, for the atonement is the means by which God makes us holy.  The way that some Gospel presentations sound, God is an absolute perfectionist and cannot tolerate the sight of sin before people are saved, but, after they accept Christ, God turns a blind eye to their sins and God can now have a relationship with them, for God sees Jesus' righteousness rather than their sins.  But I agree with Chambers that God still values holiness.  Perhaps the people in that Armstrongite offshoot are right that God cuts us some slack after we are saved that he in his holiness could not cut us prior to our salvation, and that gives us the leeway to learn and to grow.  I wouldn't make this an absolute by saying that God has nothing to do with people who are unsaved, but I think that it may be a productive way to look at justification.