I do respect the achievements of the Jewish ethicists and mystics who seem to derive genuine inspiration from the Hebrew scriptures and build a humane world view on top of them; but I don't know how they do it. Clearly non-Jews don't have the knack.
Apparently not.
The God of the Tanakh, or as Christians call it the "Old" Testament, may come off as capricious to modern sensibilities. And yes, all too human. (why is that a bad thing?) That is how the authors viewed "Him." And since there were multiple authors, there are multiple views, some of them where God is terrifying and others where God is tender.
You are right, the vast majority of the time when a Christian is citing the OT it is usually to justify some form of hatred or oppression. Most likely, they are citing Leviticus out of context, claiming that "God's law" cannot be ignored while at the same time ignoring all the other laws in the same book that they do not care about. Perhaps you are partially right. We should not do away with the "Old Testament," but perhaps certain Christians should stop citing it.
These scriptures are first and foremost Jewish. If they were as inherently flawed as you seem to think, wouldn't you expect to see rabbis on street corners preaching damnation? Instead, as you said, Jewish ethicists and mystics were among the first to construct/recognize a humanist world view, where the worth of people are upheld regardless of rank and power. If two groups of people read the same text and get different results, I would look at the people and not the text to explain their interpretations.
I was sent to a conservative Lutheran school for five years as a kid, and the view of the OT that I was taught there is as you describe. God was wrathful, constantly PO'ed about human sin, and downright scary. And then the NT comes along and Jesus dies for our sins and now God loves us as long as we believe in Him. It is an interpretation that makes sense
*if* you accept the underlying premises of original sin and substitutionary atonement. But I could not accept such a God.
Imagine my surprise the first time I discovered that the concept of original sin does not exist in Judaism. Just think of how much that would change how you interpret the stories of the OT. Then in grad school I started to learn a "new" way to view these same scriptures, on their own merits without assuming such things as original sin or any upcoming sacrifice for such sin. For example, in grade school, I had been taught that the "Prophet" books of the OT were all about predicting the coming of Jesus. In graduate school, I was taught that Prophet books were about bearing witness against injustice, were even kings are accountable to a law higher than the ones they make. Viewing the scriptures this way, one can easily see how Judaism gave birth to humanism.