I'll address the question of eternal hell.

The most dominant position does seem to be that eternal torture in hell is a just punishment. I don't remember reading of someone who calls hell a mercy to its inhabitants.

Of course, eternal torture clashes with the notion of mercy. More than that though, it also clashes with the notion of justice - if you are not getting out of hell, then its purpose can't be a matter of reforming you to a better character, or you would have to be released once you have a better character - and if you're not moving towards having a better character, then the punishment isn't apt for its purpose, and flawed for that reason; since you are being punished for an offense committed in finite time (and therefore can only have done finite damage) with a punishment lasting infinitely long, it's grossly unbalanced; the only offense landing you in hell forever is disbelief, and the one you are offending against in that case - God - cannot be harmed, so you are even being punished without having enacted any harm on anyone; saying "no that doesn't sound right/convincing to me" about what Islam claims already constitutes disbelief, and will earn you hell forever, yet massacring thousands of people in arbitrarily cruel ways only earns you a long, but finite time in hell. A long list of similar sentiments will come to most people's ethical intuition.

These conflicts are usually answered with (but not solved by) retorts to the effect of "disbelievers would go inflict nothing but evil for eternity anyway, so punishing them forever is just", or "God is infinite, so any offense against him has infinite weight", or "justice is what God calls justice", or a number of other unsatisfying responses. Taken seriously, most of them lead to the conclusion that God could send anyone to hell forever for any reason at all, and the believers would still have to call it justice.

Another conflict in a related context is that between qadr and free will - it is one of the main reasons why analogies between criminals being sanctioned by human judges and God sending disbelievers to hell forever are quite poor; human judges are not omniscient, they do not create the criminal's environment, intuitions, inclinations, and thoughts, and human judges have no means of moving a criminal away from committing a crime before they do it.

To my knowledge, there is no resolution of this clash between ethical intuitions of mercy and justice and a punishment of eternal torture for disbelief. I think I have seen the opinion that eternal hell is a manifestation more of God's wrath than of his justice.

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There have been a handful of scholars who outright said that they cannot see any justice or mercy in eternal hell either. My answer [here](http://islam.stackexchange.com/a/34747/17702) gives a reference for a book on prominent scholars who dealt with the problem of eternal hell; notably, ibn Arabi thought the inhabitants of hell will come to enjoy being there, and Ibn Taymiyyah thought that hell would eventually have to be extinguished. Both those notions are quite heterodox, but considering they are highly influential scholars from different niches of Islam and yet both felt compelled to disagree with the dominant position (which is so dominant that calling it consensus would not be a stretch), they illustrate that the problem of eternal hell is not something that is easily dismissed.