What Is Substitutionary Atonement?

A friend of mine recently challenged my questioning the idea of substitutionary atonement. She says that this is what she understands to be the gospel, and so she couldn't see how I-- a pastor and a serious student and believer in the Bible-- could disagree with it. At first I gave her a quick answer, but she didn't buy into that, and she responded with giving me a longer response.

Well, theological discussions are kind of like violence-- they tend to escalate. So rather than just give another quick response, I decided to give her a thorough response. And so I give it here, in sections. And when I say long, I mean long. I am truly sorry for those not interested in the topic of how specifically the death of Jesus atones for our sin, because I'm going to cover this for a while. And specifically I will be discussing the most common evangelical/Protestant perspective on this topic-- Substitutionary Atonement.

First of all, what is it? I summarize the evangelical version of the atonement as follows:

a. Adam and Eve sinned before God. The result of that sin was death. Now every child of Adam is under the curse of death.
b. We all sin, thus we are all deserving of death. God’s ultimate death is an eternity in hell. This is the just result of our sin against God.
c. Jesus is God, but he came to earth as a human being. However, he was not a son of Adam, but the son of God, and so not under the curse of Adam. Nor did he sin, so he was not deserving of the penalty of hell.
d. Jesus was killed as if he were a sinner. At this time, God put on Jesus all the sin of humanity. This gave the opportunity for humanity to be freed from the penalty of their sin.
e. Anyone who believes in Jesus is freed from the penalty of their sin and thus can obtain eternal life.

As anyone who has been evangelized by an evangelical knows, this is a common view of "the gospel", so you can see why my friend is a little baffled as to my disbelief in this view. However, as I hope to show I have some strong historic, biblical and theological reasons. I will also describe what I do believe in, a point of view I consider to be more biblical than the common evangelical viewpoint.

BTW, my summary, although popular, isn't the most precise theological statement. For that, I suggest checking out the wikipedia article on this subject:
Penal Substitution View of Atonement