I've heard apologetics like you describe in the OP as well and I think you did a good job of unpacking just how absurd they are. A couple of other problems with these arguments have occurred to me:This doesn't seem like it fits in with the PoE. In the PoE premises, God is an omnipotent, omniscient, omnibenevolent being: such a being would be able to prevent this karma mechanism you speak of; and they would ostensibly be culpable for its existence in the first place.
Punishing an innocent for the action of another is not very benevolent, on top of that; so this would just worsen the PoE.
1. I haven't met anyone who's ever been consistent about what's good and bad. People who argue that, say, killing kids with cancer is ultimately good in some way that isn't apparent (to use one example brought up in this thread) will generally also happily support treating kids' cancer and may even support cancer research.
Now... I'd much rather that people be kind and inconsistent than consistently cruel, but this behaviour is still inconsistent.
2. I don't think that any arguments about the harm of something being outweighed by some net benefit in the end are valid for an omnipotent god.
If we assume an omnipotent god - which the PoE does - then the god can achieve whatever positive outcome it wants without inflicting short term harm. Can God "test" us without giving a kid cancer? If God can do anything, then the answer is "yes" (since "testing someone without giving a kid cancer" is included in "anything").
This means that God's immediately harmful actions can't be excused by long-term good that might result from the harmful action. An omnipotent god could achieve the long-term good without the harm, so the long-term good can't be used to justify the harm.