I managed to work out a reason why God accepts Satan's challenge. Once again, it begins with the rescue mission, but Connor scales it up to rescue everyone except the nastiest of humans, knowing full well that the Father didn't give permission for that. And, technically, it comes very close to matching the end of Revelation in the Bible. Everyone who was destined for the Lake of Fire is forced into it, including all those Connor just tried to free.
But it turns out the lake is actually a portal to other worlds. All the condemned souls go into the lake, but most emerge on other, pristine worlds in regular (non-glorified) human bodies. The remaining humans who Connor freed, go into the lake and end up elsewhere on Earth, which has also been restored to a pristine state.
There will probably be a way to travel between worlds using the portals since there will be hundreds of planets to which humans are transported. These humans are required to "try again" from the beginning.
God will put Connor in charge of ruling everything as punishment for having freed them all, even though God knew he would do that and didn't try to stop him. Could this have been His plan all along? 
Naturally, those destined for Heaven never go through the lake and simply end up on a different plane, in a new Heaven and Earth, where they live with God, free from sin. Everyone else will aspire to get there.
The demonic spirits and nastiest humans (past and present) will also enter the lake but wind up on nasty frozen or burning worlds, and their portals will be one way only.
I can't wait to figure out what kind of world to put Satan on.