Jehovah's Witness take that stance. We believe that the references to furnaces and everlasting fire just mean complete everlasting destruction. In Revelation it says that Satan, his angels, the false prophets, and hell will be thrown into the lake of fire. In other words they will be destroyed. We believe that Hell, Hades, and Sheol just mean the common grave of mankind or death.
We already have punishment from the original sin through Adam and Eve. Genesis 3:16-19
To the woman he said: “I will greatly increase the pain of your pregnancy; in pain you will give birth to children, and your longing will be for your husband, and he will dominate you.”
17 And to Adam he said: “Because you listened to your wife’s voice and ate from the tree concerning which I gave you this command, ‘You must not eat from it,’ cursed is the ground on your account. In pain you will eat its produce all the days of your life. 18 It will grow thorns and thistles for you, and you must eat the vegetation of the field. 19 In the sweat of your face you will eat bread until you return to the ground, for out of it you were taken. For dust you are and to dust you will return.
God has punished us for the original sin that we still inherit today. In addition to the others, God also took away Eternal life. We die because we have all sinned through Adam. Romans 5:12:
"That is why, just as through one man sin entered into the world and death through sin, and so death spread to all men because they had all sinned"
That is the punishment for our sins. Then comes Jesus to save us from death. Jesus's purpose was to bring about a new covenant between man and God because the old covenant with the Jews had failed. Second Jesus gave himself to torture and death, a perfect life in exchange for many imperfect ones. That provides the basis for God being able to forgive us if we ask it of him. Without Jesus's ransom sacrifice, we would have no means to be saved and restored to perfection. This is the result of Jesus's sacrifice. Matthew 24:22:
"In fact, unless those days were cut short, no flesh would be saved; but on account of the chosen ones those days will be cut short."
"But the one who has endured to the end will be saved."
The lake of fire or destruction, is also for unbelievers. We see this from Matthew 25:32-46
"He will separate people one from another, just as a shepherd separates the sheep from the goats. 33 And he will put the sheep on his right hand, but the goats on his left."
The goats are the ones that have been given the opportunity to accept Jesus and salvation and declined. It is also the ones whom accepted Jesus, but did not live according to the way he told them to. The goats punishment is everlasting death, they will be "Cut-off" from God. Matthew 25:46
These will depart into everlasting cutting-off, but the righteous ones into everlasting life.”
To answer your question, if there was no punishment for sin then all of us would be perfect. There would be no need for Jesus's sacrifice and salvation from it. However, since Jesus came and provided salvation, then we know there is punishment to be saved from.
As to "why does a loving God send people to hell?", I think that Satan may have painted that picture of God. The thought of God torturing people for all eternity throws many people off. In fact I have family that believes that God is wrathful, has no mercy, doesn't really care about us, etc...because of the teaching of hell. Because of their perception of hell they don't want anything to do with God.
God will punish unbelievers, but not like that. When you die your sins are paid for in full, that is your punishment. Romans 6:7
"For the one who has died has been acquitted from his sin."