Since i don't believe in an interventionist god, I have a little different POV on this step. first of all, I do believe I'm part of a universal god (or mind, or love) and, like a hologram...it is in me and I am in it. It has shared (as love does) the power of mindfulness, of choice with me, but there is no judgement: no sin, only error. Error can be corrected. Sin is eternal.
Anyway....I believe the so-called "character defects" or "shortcomings," are related to my thoughts and behaviors: thus, I can with practice change them. They are not "removed." But the better I get at "practicing these principles in all my affairs," the less those character defects show up. Of course, if I cease my practice, they may be lurking in wait for me: thus....my only defense is to maintain my spiritual fitness.
I believe that focusing on the problem keeps me attached to the problem, and agree with the value of detachment. For me, since ego is all about attachment, and since ego isn't going away any time soon, that means "attaching" myself to the solution rather than the problem. What I resist, persists. I think that practicing honesty is the solution to dishonesty.
blessings
zenbear