This doesn’t explain natural evil,
only moral evil.
Premise (1) is false: An all-powerful, all-knowing God could
make free beings yet know what they would do and know that they
would never choose bad stuff.
(4) at most avoids the logical problem of
evil. The evidential problem of evil
remains: Maybe God was right to allow there to be some evil (if
premises 1 and 3 are true), but not the amount (and kind) of evil
we find in this world.