There's something quite counterintuitive about the above reasoning (to me, at least - I assume others' intuitions are similar). That doesn't necessarily mean it's wrong - instead I think our intuition is. But it just seems strange to talk about Sue's will in such a case. We see the victim in a passive light, whereas 'will' seems to be an intrinsically active phenomenon. (Isn't "passive exercise of will" a contradiction in terms?) But I think the ascription of passivity was probably where our intuitions go awry. Anyone being tortured would surely 'will' (very strongly and actively) that the torture cease.
So why do we think divine interference would be an assault on free will? Perhaps this laissez-faire approach rests on a deontological rather than consequentialist view of divine morality: that is, it would be wrong for God to obstruct any person's free will, even for the sake of others' freedom. I don't know, maybe that could work, but it doesn't seem very plausible to me. In fact, preventing people from doing evil strikes me as an entirely good thing. It is in no way bad that you are obstructing their will. If their will is to do evil, then it ought to be obstructed. They can still choose to be evil (in character), and attempt evil deeds, but any omnibenevolent being would surely do all in his power to ensure that those attempts did not succeed in harming anyone else.
But in case you disagree on the above points, there is an even more compelling example of God-withheld freedom: addiction. What possible justification could there be for making human brains predisposed towards addiction of any sort? It only impedes our freedom, restricting our ability to make rational decisions and exercise our 'free will'. Similarly for mental illness. Our brains are far from optimal when it comes to freedom and rationality. If God existed, he could free us from the bondage of addiction and other serious mental defects. So I think the importance of free will actually counts against the theist when considering the problem of evil.
Some other aspects of the problem of evil were discussed elsewhere a few months ago: See, for example, Chris' objection to the "God works in mysterious ways" response. Also, Jonathan Ichikawa and Brian Weatherson describe some clever (possible, if perhaps not entirely plausible) solutions from possible worlds.
The best (most interesting) solution I've ever come across is undoubtedly Mark Steen's (scroll to April 27) Lagadonian extension of Ken Gemes' response:
"God did not create this world, he merely thought of it. Our world then is a merely possible world, one God thought of but chose not to create. Presumably it was his knowledge of the evil in this world which led him to decide that it was beneath creation..." (Gemes)
[...]The major problem, of course, is dealing with incredulous stares and people pounding their Moorean fists. How to reply? The answer is that God speaks and thinks in Lagadonian, and, while ‘speaking’ the actual world in Lagadonian, he merely thought of our world in Lagadonian. But what, pray tell, is Lagadonianism? Well, I’m glad you asked.
A 'Lagadonian' language [...] is a (or 'the') language where every object is a name of itself (and, similarly, every event is it's own name/description, every property is a name for itself, every state of affairs is its own description, and so on). Just as we can represent the state of a affairs of 'the apple is red' by 'le pomme est rouge', 'la manzana es rojo', by morse code [etc...] so is, or possibly can be, the state of affairs of the apple being red represented in the apple's being red.
Now, assuming God exists, we'd like to suppose that he would think in the most perfect language possible. There's a prima facie case, if a Lagadonian language is possible, that God would think in Lagadonian.
The idea being that all the physical objects in our world are merely the Lagadonian "words" God has thought of, but not actually said. That makes our world non-actual, so the evils in it don't matter, so the empirical facts are consistent with an omnimax God after all. You've gotta love philosophy.