I'm still not sure I understand your difficulty the gods basically being ultrapowerful children is a staple of mythology. Greek, Norse, Sumerian, Chinese, you name it.

OotS at least allows there to be higher principles of alignment that supersede even them.

Has Rich created a crappy world? Yes, and based on multiple indications (including his post above) I feel confident in saying that it was intentional. The thing about good writing is that he can't simply tell us how crappy things are; he has to show us. That means he needs characters that aren't card-carrying villains practicing racism, injustice, and gratuitous violence.

So just hang in there, and wait until you see the end before judging the whole.