Do you believe often the source lets bad happen so perhaps possibly good can come out of it in the longterm?

Yes. I've know this to be true. It's called learning from your mistakes. Some of us just make bigger mistakes. Here's what the Bible has to say as well. Trials and tribulations are a test of our faith.

Romans 8:28 And we know that all things work together for good to them that love God, to them who are the called according to his purpose.

Isiah 55:8 For my thoughts are not your thoughts, neither are your ways my ways, saith the LORD.

You are absolutely correct, semi enlightened:

We are a theater of the universe, and even injustices in the best form of government, democracies, shows that we are miserable failures at trying to control events on this world, controlled by the Prince of Darkness.

But Jesus has assured us that everything that happens in secret will be revealed, and God is an impartial judge. He will be vindicated and when all is said and done, Earth will be re-created and "iniquity will not rise a second time."

One day sin and sinners will be no more and peace will return to all of God's universe. The sin problem caused a change, though. You see, semi enlightened, because Adam lost his right to reign on this planet through transgression, God Himself became a human, lived sin free, and bought the right to reign on Earth as "the Last Adam."

Earth will be the new Capitol of the innumerable galaxies and Jesus will be our God and we shall be His people. Did you know the Bible tells us the EXACT month, day, and year that will happen? http://revelado.org/thetimeoftheend.pdf

Blessings, Messiah

Something like that. God very often turns trials into blessings for those of us who love Him.

I haven't seen much good come from religion yet, and that includes the past several thousand years of history.

Its we who punish ourselves, other then that, IT remains as IT is, I am talking about on the spiritual plane. On a Material plane its another science altogether

That would be a snake eating itself. A house divided. To get good by doing bad, would be self-destructive.

On the other hand, being totally omnipotent, why allow bad to happen at all when you control it totally?

Yep yep yep.