Nityananda-rama dasa
It both assumes that evil can not serve a higher good and it discounts free will.
Doesn't it also assume that evil is an objective moral direction, which humans, animals, and
forces of nature actually make a conscious choice of, with full knowledge of the evil they're doing? Rather than, say, that humans do "bad' things believing them to be "good" things (i.e. the Crusades, the Spanish Inquisition, the Witch Hunts, the Red Scare, the Holocaust, 9/11, etc.), that animals attack humans purely following animal instinct, and that the elements will do what they will whether we're in the area or not.
So really, the problem isn't that God doesn't stop all the evil in the world. It's that we are self-centered enough to assume there are "evil" things specifically targeting us.