I was born after VII and missed the worst of your experience.  However, my first few years in the Church (as an adult convert) involved this merit based salvation, then after a few years of trying to be the perfect Catholic, constantly feeling guilty and fretting about not being good enough for God, my moment of transformative grace came in surrender to the reality that I am a failure...and God loves me that way.  The freedom of not having to be perfect has energized my spiritual life and love for God in a way that perfection never could have.  I now understand St. Paul when he says "the letter of the law kills, but the spirit gives life."  I think (I am riffing on Richard Rohr here) that strict, rule based, merit based religion is a necessary stage of growth on the way to spiritual adulthood.  Some people mistake an adolescent spiritual rebellion for real freedom, others take the opposite tack and are so afraid of rebellion that they never grow to adulthood.