Good stuff; I can't see much to quibble about this time!

> hann svo miskunnsamur að hann metur allt það meira sem vel er gert."
> he is so merciful that he judges it all more as well which is done."

"[...] that he gives more weight to that which is done well."
"[...] that he counts as more important whatever is done well."
"[...] all the good things you do."

'allt það ... sem' "all that which" (i.e. whatever) = 'allt það ... er'.