Would you have him simply stop people, like a puppeteer, and just nullify free will?
We make laws and mete out punishment to influence behavior, and somehow free will survives just fine. Moreover, there's things I simply can't chose to do, because of the laws of physics. Somehow, restraints on our behavior don't mean we don't have free will, so why would this be any different?
Would you miraculously save all the victims and and render people's free will effectively void?
Free will means choice. It doesn't mean that the outcome you chose must be guaranteed. Guns misfire and knives break, but it doesn't affect your choice to have committed violence.
At any rate, it doesn't matter. If we needed the capability to be bad in order to have free will, God would have created us that way. But according to your Bible, that's not how it went down.
Even in the Garden, without the capability to know wrong, Adam and Eve had free will. There's an infinite number of ways to do the right thing. You don't need the choice to be bad to still have choice.