I had understood this same LDS version of the atonement as it was attributed to Cleon Skousen in a type written, oft photocopied, manuscript from my mission.
Essentially it goes that the source of God's power is his honor. He so perfectly walks the razor wire that all the elements pay him homage. Unfortunately, if he were to forgive those that do not deserve forgiveness it would violate justice and the elements of the universe might revolt against this seeming inconsistency. General chaos would then reign and order would disintegrate. It was therefore necessary that someone that was universally loved and respected would intercede on the behalf of the accused. The universe is moved to compassion and together petition God to rule with mercy. God is then free to forgive the sinner without losing his honor/power.
He used restoration scriptures to support his version.
I now see that this is a Mormonized version of the Satisfaction theory/Governmental thoery.
The third metaphor, used by the 11th century theologian Anselm, is called the "satisfaction" theory. In this picture mankind owes a debt not to Satan, but to the sovereign God himself. A sovereign may well be able to forgive an insult or an injury in his private capacity, but because he is a sovereign he cannot if the state has been dishonoured. Anselm argued that the insult given to God is so great that only a perfect sacrifice could satisfy, and that Jesus, being both God and man, was this perfect sacrifice. Therefore, the doctrine would be that Jesus gave himself as a “ransom for many”, to God the Father himself.
The next explanation, which was a development by the Reformers of Anselm's satisfaction theory, is the commonly held Protestant "penal substitution" theory, which, instead of considering sin as an affront to God’s honor, sees sin as the breaking of God’s moral law. Placing a particular emphasis on Romans 6:23 (the wages of sin is death), penal substitution sees sinful man as being subject to God’s wrath with the essence of Jesus' saving work being his substitution in the sinner's place, bearing the curse in the place of man (Galatians 3:13). A variation that also falls within this metaphor is Hugo Grotius’ "governmental theory", which sees Jesus receiving a punishment as a public example of the lengths to which God will go to uphold the moral order.
I also see that - even though Mr. Skousen seems to have cherry picked scriptures to make his position - there are also plenty of LDS scriptures/examples that would support the other theories. Mormonism as a whole does not seem to be able to make up its mind as to how and why the atonement works.
Old-Timer did an AMAZING SS lesson on the various atonement theories that exist here:
viewtopic.php?f=9&t=3481&p=72824&hilit= ... ies#p71618
"It is not so much the pain and suffering of life which crushes the individual as it is its meaninglessness and hopelessness." C. A. Elwood
“It is not the function of religion to answer all the questions about God’s moral government of the universe, but to give one courage, through faith, to go on in the face of questions he never finds the answer to in his present status.” TPC: Harold B. Lee 223
"I struggle now with establishing my faith that God may always be there, but may not always need to intervene" Heber13