At this point, granting his assumptions, I would agree. The Penal Substitution "theory" (if we may call it that) does have serious problems. However, just as other objections raised by atheists such as "Do we stone people for breaking the Sabbath?", the answer is quite simple if we understand the Covenantal nature and presuppositions of the Bible.
This morning, I continued reading Buchanan's Doctrine of Justification. In Lecture XI, proposition XII, he asks,
But is has been asked, can there be any real substitution of one for another under a system of moral government? Does not the Law require personal obedience, and threaten personal punishment? and must it not, therefore, be exclusive of vicarious agency, whether in the shape of obedience, or of suffering?To which he responds,
We answer, that the Law of God, in its covenant form, recognised from the first the principle of representation, by constituting Adam the federal head of his race; and that it is only the transference of the same principle to a new relation, when the Gospel reveals the fact that Christ, as Mediator, was constituted the legal representative and surety of His people. The 'first Adam' gives place to the 'second Adam, the Lord from heaven;' and, in either instance, the welfare of others is made to depend on them. For 'as by one man's disobedience many were made sinners; so by the obedience of one shall many be made righteous.' For as Adam was 'made under law,' the representative of his posterity; so Christ was 'made under law,' the substitute of His people. 'God sent forth His Son, made of a woman, made under the law.'Buchanan proceeds on to explain that the law that all men are under is the moral law. This is something the atheist can't even begin to explain except to assert their "metaphysics" as some form of revelation which we should believe just because they say so. So it is true that all men are accountable for their sins. However, Mr. Ellis misses the Biblical truth of the covenants, and that God has appointed covenant representatives. This is God's creation, and we are His covenant children.