Yitayningwut:
1) There is a concept in Chaza”l of a “Tzaddik” by nature and a “Rasha” by nature. This is what the Baalei Mussar refer to as someone with “Middos Tovos” or “Middos Ra’os”. True, the Torah Sh’Biksav only discusses laws and not character; but Chaza”l in Pirkei Avos discusses character. The Mishna I quoted above is clearly discussing how Avrohom Avinu was defined as a “Tzaddik/Good” in character. Ayin Tov/good eye is a character trait; so is Ruach Nimucha/humble spirit and Nefesh Shefeila. Also the Chaza”l which says “Ma Hu Rachum Af Atu Rachum” is discussing the character trait of compassion. A good hearted/compassionate/loving person is a “Tzaddik” by nature; he may be “Rasha” bain adam l’makom who commits immoral acts, but he is nevertheless a “Tzaddik” bain adam l’chaveiro.
2)I mentioned a few examples in my above post of actions which are permitted by the Torah, but it is nevertheless praiseworthy to refrain from doing on account of our moral feelings. Gezel Ach”um, Capital punishment, Bi’ah Shelo Kidarkah, Goel Hadam are all permitted but Chaza”l say (at least the middle ones) one should try to refrain from doing because of one’s moral feelings. I believe that the Torah is from God, but it doesn’t seem contradictory to me that the Torah halachically permits certain acts even though they run contrary to our moral feelings. On the other hand, we see the Torah constantly commends one for acting kind and compassionate to all the creations of the world, as I quoted above from the Midrash which says that Hashem choose the Avos Hakidoshim and Moshe Rabeinu because of the compassion they showed towards the sheep they shepherded; also the possuk in Tehilim says “V’Rachamuv Al Kol Ma’asuv”- animals included.