I want to retract my statement that "God's creation sucks"
Good. No sensible person would believe that for very long.
things should've continued running smoothly; why didn't they? Free will?
Rebellion caused things to go wrong. Free will was a mandatory perameter for what God wanted out of his creations. He wanted voluntary service.
Well some part of his "perfect" and "good" creatures wanted something "bad".
It's not that they wanted something bad. They thought that their ideas were better (or gooder). They thought that they could know better than God, like you are doing now.
How could a perfect being created from a perfect God seek "bad" things
They didn't seek bad things. They rebelled. This rebellion allowed them to change themselves from what God had made. They were no longer what God had made. Then they sought bad things.
God himself regretted making us
I have not yet seen this demonstrated.
that in itself shows that he questioned his own work.
I have not seen that demonstrated and if God questioned his own work he would be considering the possibilty that he was wrong. God can do no wrong. He is too smart to make a mistake.
Don't you think if he tried this again he'd change some things?
The only thing you have successfully brought into question is the virtue in the gift of free will. If God does not grant free will then God has robots, not sentient beings. Sentient beings are much more wonderful that robots. Robots can only be programmed to love. That would not be genuine love. Since God is a God of love, he would not be satisfied with that creation. So he would have no choice but to create the same things he did before and run the risk of rebellion. Once this rebellion is proved wrong beyond all question the remaining creatures can attest to God's true authority and the anarchy and misery that rebellion leads to. These creatures can then act on an authority given by God to crush any rebellion should it arise, if ever.
If so, that shows that something, however minute, was flawed.
I'm sorry, that is incorrect, unless you can show something that should have been changed.
If this turned out to be the case, then God is in fact to blame. . .
That is in fact not the case. I'm sorry but you just haven't shown anything that God could have done to create intelligent creatures, with freewill, and no chance of a rebellion. The only objection you can raise at this point is that 'freewill is evil' and only God should have it. Feel free to start over.