I've been thinking about what Jesus had to say about the afterlife, so I thought I would jump to my thoughts on Jesus and judgment, maybe the second to last chapter. It seems a chapter like this one should start with the well known passage in Matthew 7 on not judging.
In the not too distant past, Matthew 7:1 was probably one of the best known sayings of Jesus in all the gospels: "Do not judge, or you too will be judged." I say "past" because the tone of much of American Christianity has arguably changed in the aftermath of 9-11 and other events thereafter. Very many Christians today feel quite comfortable drawing conclusions about the righteousness of others, especially those in the public sphere.
However, there was a time not too long ago when many Christians were at the opposite extreme. The logic went like this. Jesus tells us not to judge others. After all, we're all sinners and "all sin is sin," so I'm as guilty as the next person. I have no right to be down on others for the problems I think they have because my problems are basically the same. I would be a hypocrite to point out someone else's sin.
There was a great deal of truth in this line of thinking. While there are a few problems with the logic, it does indeed capture the spirit of Jesus fairly well. Human nature being what it is, we are more prone to be judgmental and critical in our spirit than to be generous and forgiving. In that sense, Jesus would surely rather us err on the side of not judging than on the side of judging.
But Jesus does judge and Paul also judges. That is, they draw conclusions about whether others are in the right or wrong. Matthew 23 is an incredibly strong pronouncement about the hearts of the Pharisees. And "discipline" is part of Christian community. Matthew 18 gives a process by which a member of the community is confronted and potentially shunned. Whatever it means not to judge in Matthew 7, it does not preclude the judgment of Matthew 18 and 23.
For example, you can know that someone has done something wrong and be loving about it, or you can know others have done wrong and have a bad attitude toward them. Similarly, a person can enjoy paying back someone who has done wrong or you can discipline with the sincere desire that a person be redeemed, reconciled and reclaimed. If we witness a murder, it is not judgmental to draw the conclusion that the murderer has done wrong. The difference is that Jesus is sad for the murderer as well as the victim, while the "judger" enjoys the thought of the murderer frying.
So there are both truths and problems with the popular interpretation of Jesus' instructions not to judge. You will not find anywhere in the Bible where it teaches that "all sin is sin." Some sins are worse than others because sin is primarily a matter of intent, not of the act itself. The more defiant your intent is against God or the more hateful your intent is against your neighbor, the greater the sin. 
Similarly, "judging" others is either good or bad depending on our intent. Here it gets very tricky. We are prone to lie not only to others but to ourselves about our intentions. "I'm talking about what they did because I'm concerned, not because I'm judging." If we are in doubt, we are best not to talk about the possible sins of others at all.
And this is a particularly important point. While in many cases we observe someone doing something wrong or perhaps they even confess to us that they have done something wrong, in far many more cases we do not know for sure what the motives or intentions of someone were. It is in such cases that Jesus' instructions not to judge become particularly important. We may know what we would have been thinking if we did something, but other people are different from us. We need to be very careful not to assume we know what someone else intended.
At the same time, the excuse that "we are all sinners" won't cut it with the New Testament. There is no verse in the New Testament, when rightly interpreted, that indicates that intentional wrongdoing is normal in the life of a Christian. The words of Hebrews are some of the strongest in the New Testament: "If we deliberately keep on sinning after we have received the knowledge of the truth, no sacrifice for sins is left" (10:26). The "Christians are just as much sinners" line doesn't work for Paul and it certainly doesn't work for Jesus.
In the end, we take away at least three things from Jesus' instructions not to judge. First, we as humans are prone to hypocrisy. This is really what Jesus' statement is most about. The problem is that those who most like to point out the faults of others often have the same or worse problems themselves. Psychologists call it "projection." When we feel guilty for some fault, we may be very hard on others who have the same or similar ones. We make ourselves feel better by putting others down.
So Jesus tells the crowds in Matthew to take the "plank" out of their own eye before they worry about the "speck" in someone else's. Someone else once put it this way, for every one finger you point at someone else there are usually at least three pointing back at yourself. While we should never consider sin normal for a Christian, we all have faults and weaknesses. We would be wise not to spend too much time dwelling on the faults of others.
A second take away is to be extremely careful about how we "fill in the blanks" about the intentions and motives of others. We usually think we're smarter than we are when it comes to such things. And those of us who are used to being lied to can get hardened to where we don't trust anyone. Jesus surely doesn't want us to be gullible and stupid in our dealings with others ("be as shrewd as snakes," Matt. 10:16). But surely even more he wants us to look for the best in others and to give them the benefit of the doubt when at all possible.
Finally, as followers of Jesus we should be more interested in mercy than in justice. To be sure, it is not loving always to let someone out of the consequences of their actions. Justice can be loving when it is meant to protect society at large and when it tries to steer the lives of those off track in the right direction. But a Jesus follower should have no interest in justice for its own sake. "Mercy triumphs over judgment" (Jas. 2:13).
So there is a time to draw conclusions and administer discipline in the church. There is a time to draw conclusions about the actions of others. There is a time to confront, especially when we are in authority. However, most of the time we should presume the best of others and leave to others their own relationship with God. Most of the time the urge to judge comes from hypocrisy and faulty priorities.
I should spend significant time searching my own heart and motives before I ever confront. I should examine carefully whether it is my place to confront. Most of the time it is not my job. I must be aware that different Christians have different understandings and that in many respects I stand before God as an individual conscience. Am I willing for my motives and intentions to undergo the same scrutiny that I would bring to bear on others? If not, then I had best be silent.
 An easy example of this fact is 1 John 5's distinction between a "sin to death" and a "sin not to death." In addition, there is the differing way Paul treats different sins. The man sleeping with his step-mother is immediately kicked out of the church in 1 Corinthians 5, while the carnal Corinthians of chapter 3 merely are told to grow up.
Ultimately, the "all sin is sin" position likely comes from the popular belief in eternal security combined with Paul's "all have sinned." Before we believe, all sin means we need God's grace. The situation does not change after believing for those who believe in eternal security, for no sin knocks you out. However, Paul does not teach eternal security (cf. 1 Cor. 10).
 The case is quite to the contrary. Most experts on Romans now agree that Romans 7 is a dramatized expression of a Jew who wants to keep the essence of the Jewish Law but does not have the power of the Spirit to do so. Paul's position is rather that believers are no longer slaves to sin (Rom. 8:1), do not fulfill the desires of their sinful nature (Gal. 5:16), and that those in the flesh cannot please God (Rom. 8:8). 1 John 3:9 similarly says that those who are born of God will not live a life full of sin.