I haven't read the book, but these posts have been intersting and refreshing to me, and I wanted to thank everyone for sharing. I'd like to try to put into words my approach to handling tough gospel questions, which I'm sure bears some commonality with the approaches you all have shared.
I think I've gradually come to a position that is best described as a cross of "by their fruits you shall know them" and "if it ain't broke, don't tinker with it." That is to say, I follow the gospel because I've seen it work countless times in so many lives--most importantly, my own. To spend much time wrestling with peripheral church history or doctrinal issues is, for me, counter-productive.
This is not to say that I turn a blind eye to any and all hard questions, but rather to clarify that questions of historical authenticity and leadership fallibility tend not to worry me much, because my testimony of the gospel has almost nothing to do with either issue.
This perspective makes many members of the church uncomfortable. As a church, we are brought up investing so much of our testimony in the tenet that God guides this Church directly through his prophets, that to question an apostle or even a general authority seems sacrosanct--as if we're questioning God Himself. After all, if you start to question one thing that one prophet said, it's only natural to question other things other prophets said, including Joseph Smith. It's a slippery and dangerous slope.
But that's where I find myself at times. I have way too much trouble, for instance, justifying the withholding of the priesthood from blacks with some sort of hypothetical cost/benefit consideration that finally shifted 30 years ago. Could there have been cost/benefit considerations at play in the mind of the Lord? Yes. But it seems equally likely to me that our prophets and apostles were/are susceptible to errors in judgment.
I don't believe that errors in judgment necessarily constitute fraud, even if an individual attributes the judgment to the Lord. I think that all individuals, no matter who they are, have trouble differentiating sometimes between divine guidance and personal feeling. And perhaps in some cases, the Lord achieves great works through individuals who are somewhat mistaken about what it is they are doing--e.g. is there any harm to the belief that, while Joseph Smith thought he was translating papyrus, in reality he was simply a conduit for scriptural material that the Lord wanted us to have? Then again, I would not be surprised to find out that orthodox versions of problematic events are in fact authentic. For example, I think there are enough plausible explanations out there that any rational person could reasonably entertain the idea that Joseph Smith actually translated the Book of Abraham.
So how do you know what is error and what is not? Well, in many cases, it's irrelevant. For example, how the Book of Abraham came to be does not change the real-life effect that the Book of Abraham has on me right now. And therefore, it does not matter to me how the Book of Abraham came to be. I do not need to have faith that the Book of Abraham is an 100% authentic translation, rather I just need to have faith in the teachings found therein.
What happens if I find myself at odds on a position that requires some sort of action (see my Prop 8 posts from last year). Do I give the benefit of doubt to church leaders, even though my gut instinct is that they are wrong? Or do I trust my gut and assume the leadership is wrong? In either case, I think the willingness to admit to oneself that "the Church being true" is not synonomous with church leaders always being correct actually facilitates a very healthy response, as long as one is also willing to 1) admit as much or even more doubt in one's own opinion; and 2) not let the issue become a distraction from following more important teachings.
What would I do if I was at odds with a position that had a more personal impact? I have, after all, core beliefs that I don't see myself ever changing. And by core, I mean beliefs that have a real-life, personal impact, such as "thou shalt love thy neighbor as thyself." I think it goes without saying that I would have to leave the Church if it ever expressly taught us not to love our neighbors. I just have faith that I, personally, will never be at odds with the Church over those core beliefs. But I know some people who have core beliefs that are fundamentally at odds with the Church, and I would think less of them if they stayed in the Church while having those beliefs.
Could the effect I perceive the gospel as having in my life be, as Alvin warns, a placebo effect? I think any rational person has to admit this possibility. Even though I have faith that the gospel isn't a placebo, it would be dishonest to myself not to leave my mind open to the possibility that my faith is misplaced. But the anecdotal evidence seems to point to the fact that it isn't a placebo effect, and I see no compelling reason to change my beliefs just to find out if there is a difference.
The biggest challenge to me has been figuring out how, approaching the gospel from this angle, I should approach interactions with others, both inside the church and outside. How do I tell a new member, for instance, that of course the Book of Mormon is true, but it doesn't matter whether Joseph was really translating the Book of Abraham? Do I just offer plausible explanations, and hope that they take one of those and run with it, or is there a way to help them see that the issue is, in reality, nothing more than a distraction?