Dear, DirkW.
My short view about your concern is as follows.
1. Regarding, "we only speak from outward about their behavior."
Christians are not to speak from mere outward about our brothers' behavior. Christians are enabled by the grace of God to sincerely correct, rebuke and encourage. It is through the Word of God, all Scripture, not only part of it, that is useful of teaching, rebuking, correcting and training in righteousness, so that "man of God" may be thoroughly equipped for every good work. (2 Timothy 16-17)
2. Regarding, "Hearts are not getting changed."
My belief is when the Spirit speaks through the Sprit-filled man, the speaking softens and ultimately changes hearts, even the hearts of God's elect, Christians.
3. Regarding, "and people fall into legalism"
As far as I know, keeping God's words never makes Christian legalistic. Christians love God's Words and are enabled by the Spirit to keep them. Legalism is idea or practice that salvation can be achieved by keeping the law. Legalism is wrong, but Christians keep God's words. Preaching on repenting sins and turning hearts to God's Words never make Christians fall into legalism. It rather saves people from legalism by teaching them to depend on God's power and mercy day by day.
4. Regarding, "grace"
As for grace, I want to quote Titus 2:11-12. "For "the grace" of God that brings salvation has appeared to all men. It teaches us to say "No" to ungodliness and worldly passions and to live self-controlled, upright and godly lives in this present age...." If we received grace, wouldn't the grace say the same thing? If the grace works in us wouldn't the grace will tell us to speak the same thing, saying "No" to ungodliness and worldly passions and "yes" to self-controlled upright and godly lives in this present age?
5. Regarding, "position in Christ"
Our mere intellectual or doctrinal position is never sole requirement of salvation including sanctification of Christians. It is our actual talking, acting, and living resulted from "new heart", empowered by the Holy Spirit that dwells in us that count. In other words, our personal relationship should manifest what we proclaim or where we position ourselves.
6. Regarding, "Do we already know our Sins by our conscience?"
I believe when we pray the Holy Spirit shows us our sins and help us repent. But also, church is also charged and privileged that we confess our sins to each other. Then can I assume that the Scripture is suggesting that there are sins that could be, or only could be rebuked, corrected among the fellowship of brothers and sisters of Jesus Christ? Then, don't we need brothers and sisters, which is the church, to do so in our fellowship with God?
Dear, DirkW. This is my first post on Sermonindex. I humbly share my view as one of them who deal with same issue. I don’t know who the preacher is and how the person is involved with you. But I wish I don’t personally offend the person or you by my post. Please regard my post as immature view which requires brother’s rebuking and correcting. Please correct me if I am wrong in any of my views. I thank you for reading.