"Some of the same things I have wondered about. Since God gives us the power of choice, does that really mean that he doesn't know what we are going to do or decide? Or does he CHOOSE not to? But if he really is all powerful and knows all things before they happen, then yes, why does he test people?"
I think that God does know what He has planned for us in this life. He has prepared a purpose for each saved person.
Ephesians 2:10 For we are God's workmanship, created in Christ Jesus to do good works, which God prepared in advance for us to do.
Our job is to find out what that purpose is. I don't look at it like testing me. I look at it like discovering what my gifts and talents are. I don't think He knows what we will choose, I don't think He chooses for us. I think He leads us to discover. For me that is why it's more important to focus on what my purpose is and not constantly doubt my salvation. I'm good at not doubting my salvation. I'm not so good at finding my purpose.