The GOD of the old testament seems harsh, brutal, quick to dish out punishment, and slow to let transgressions go without some recompense. The Law of Torah is filled with death penalties for trivial crimes (or so they seem to us). We do not like to think of God in this light, as we believe that our souls and our futures are in his hands. Along comes Jesus! From the new testament we can see that he is loving, forgiving and fair. Whew! we know we can trust this guy not to kill us for stepping out of line.
In traditional christian thought, Jesus and the Father are one being, so what Jesus is, so is the Father, and we come up with ways to explain away the actions of the old testament god. The mormons, along with other modern arians, did not believe in the traditional trinity, but considered that the members of the godhead were all separate beings. Well, this brought up the idea of the vengeful old testament god again. If there was no new testament Jesus side to god himself, new explanations would have to be found, or the old testament would need to be downplayed (as many modern christian denominations do).
Now, I'm not sure when the Justice vs Mercy doctrine became very popular in mormonism, I'll have to do some research, but, perhaps it stemmed from these early days of the church. The basic premises of the idea is that God represents JUSTICE! perfect justice that must be satisfied at all costs! and Jesus represents MERCY! perfect mercy that could forgive those who were killing him as it was being done. When we sin, God demands that justice be served, thrusting us out into the darkness if we are the least bit imperfect - and then, Jesus saves us with his mercy, by forgiving us and taking on our sins for himself. How this works exactly is up for debate. When we are through with this history lesson, I want to show why this was a false idea in all of its incarnations.
In the very early 1900s, the mormons still believed that god the father was Jehovah or LORD of the old testament, and Jesus was a separate person who played a role as explained above. The modern era was approaching, many converts were joining the church, and as a result, many of the members of the church were becoming uncomfortable with the idea of this GOD, personally untempered by a kinder half.
Luckily for them (or not, as your point of view may be), Talmage came along and introduced what I like to call reformed trinitarianism. Basically, the old testament God, Jehovah, really was Jesus - just pretending. Besides all of the weird stuff that does to your brain (if you were brought up to be a non-trinitarian) like Jesus talking about himself in third person; Abraham, Issac, Jacob and Moses were really talking to Jesus, not the father; and apparently you prayed to Jesus before he came and the Father after etc., it neatly solved the current moral dilemma by placing the mormon godhead in the same murky water as the rest of christianity. Even though this didn't really solve the problem, it DID in so many people's minds, that it didn't really matter one way or the other.
In this doctrinal setting (Jesus is Jehovah), the idea of Justice vs Mercy would not have become as important since both roles were being played by the same person anyway (thus the internal cohesion (or confusion, as I like to think of it as) of the two would have been emphasized rather than the separateness).
Now for the fun part! How is this idea fundamentally flawed?
First off, separating these two attributes between the pair of them implies that God cannot forgive, or is incapable of mercy. Many would tend to agree with this - he represents the LAW, and it would be unbefitting of him to bend it for us (as many a tale about kings exemplifies). But, the other side to this would be that Jesus cannot exhibit justice, or met out retribution. Before you say 'of course he does not judge us - he loves us all unconditionally', remember his words to the scribes and pharisees, remember how he scourged the temple of the money changers, how he scorched the fruitless fig tree. These are not the actions of a man without justice. The thing that Jesus did, that I think was remarkable, was he knew when people were selfish or greedy or abusive, and called them on it - even if it was an acceptable practice for the day. He also associated himself with, and forgave, those that society had cast out. In short, he could see through social and cultural labels down into the human soul.
I would also like to point out that God in the old testament isn't as unmerciful as many think. Just peruse through the search result for forgive in the old testament. As an example (as I am running out of time)
Psalms 86: 5 For thou, Lord, art good, and ready to forgive; and plenteous in mercy unto all them that call upon thee.
There are examples of god the father forgiving people without requiring a sacrifice BEFORE Jesus is born and is killed. There are also examples of Jesus freely forgiving those he met in his life "your sins are forgiven you, go and sin no more". What does this mean? There was no Justice exacted before forgiveness was granted - how is this possible in the DEATH=SIN/SIN=PUNISHMENT model of things?
Lastly, this idea sets up two different ideals - one just and the other merciful. If God and Jesus are both perfect, shouldn't they share an ideal rather than separating it out between them? Is perfection Just, or is it Merciful? If we are to be perfect like our father in heaven is perfect, should we show no mercy, but demand justice in every case? What becomes of the message of Jesus to forgive everyone who crosses our path?
We ourselves should be striving for a balance between the two, and so why not our prime examples in this life as well? God is merciful, Jesus is Just. Instead of patching up things we don't want to hear, we should take a close look at our holy books and either denounce their ideals as not our own, or come to an understanding of the message which the authors were intending.