Except it's not written as punishment. You go to the wall, and you eventually dissolve and cease existing.
That's not punishment when compared to most of the other afterlives. In fact that would likely actually draw people to atheism.
And people that have never heard of a God can still be accepted as being faithful to the ideals of a God and be accepted as a petitioner.
As for children, they go to where their parents are. Which sucks if your parents were Bhaalists or Cyricists.
I'd prefer it if they went to Chauntea instead. In my head-canon thats where they go.
You seem to keep missing the "after potentially centuries of bone-cracking torture that drives them mad from endless agony" part of the wall.
Your logic just seems to assume that "getting what you expect" is somehow justice, and that permanent soul death is somehow less heinous that murder.
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The Fugue Plane is simply a demiplane set up by Ao in Realmspace for the orderly processing of souls, so that they get handed off to the right pantheon (or to other planes or pantheons as appropriate), and they only end up Faithless if no deity will take them because they completely forsook all deities in life and there isn't one in Realmspace that would take them (and not one apparent outside Realmspace they could be handed to either). . .and only end up False if they completely betrayed the tenets of their faith in life. . .not simply making errors or shortcomings any mortal could make, but serious and total hypocrisy.
The problem with that is Ilmater. Ilmater is the god of slaves, the oppressed and martyrdom and one of his schticks is to "take their burdens or take their place"
So, if Realmspace has a God who is legitimately willing to suffer for others.... why wouldn't he take the Faithless and protect them from the wall?
Or, why not the Goddess of Mercy, Tamara and Sharindlar? Why would they not take the Faithless? Tamara's portfolio includes forgiveness as well as Mercy.
Or, why not an evil god like Cyric, who would enjoy tormenting the souls and endlessly tricking and making them suffer. Or a deity like Oghma who would desire to teach them and spread knowledge.
This concept that none of these entities who could very easily have a reason to gather souls, when souls equal power, and instead consign them to torment followed by Oblivion... makes no sense.