How shall we then forgive?

Christians, in whom Christ himself dwells by his Spirit, are called to embody Christ to the world, loving the world in the way which he loved the world. As such, St. Paul urges the church, "Bear with each other and forgive whatever grievances you may have against one another. Forgive as the Lord forgave you" (Colossians 3:13). In the same vein he admonishes the church to be "kind and compassionate to one another, forgiving each other, just as in Christ God forgave you" (Ephesians 4:32). But what exactly does it mean to forgive as God forgave us?

For a long time I thought that this means three things: (1) Our forgiveness must be conscious and intentional, acknowledging others' hurts and wrongs against us, yet wiping them away nonetheless, never holding a grudge again. (2) Forgiveness will often hurt and cost us. To continue serving and extending love in a relationship which has brought pain, we have to absorb the pain and free others from it. (3) We should forgive freely, requiring nothing from the offender. After all, such is grace, right?

But in the Bible, while God grants the new birth, faith, and repentance (which are distinct but inseparable) unconditionally, he does not forgive or justify unconditionally. Perhaps we could call this "conditional grace": he only forgives those who repent of their sins and embrace their Rescuer, his Son Jesus. Jesus hints at this in his teaching on forgiveness. In the parable of the unmerciful servant (Matthew 18:21-35), Peter asks if there is a limit to how much he should forgive someone. Jesus replied that he should forgive in unlimited measure ("seventy-times-seven times"). But the king (representing God) forgives his debtor only when his servant fell on his knees before the king and pleaded with him for mercy (vv. 23-27). The king later said that "I canceled all that debt of yours because you begged me to. Shouldn't you have had mercy on your fellow servant just as I had on you?" (v. 33). While Jesus' main point is that recipients of God's mercy ought to extend that mercy to others, there is a hint even here of granting only conditional forgiveness.

While I don't think it's right--or even practical--to hold grudges on people who've wronged us, does this passage and the necessity of confession and repentance for God's mercy teach us that we are only really required to forgive others when, in contrition, they ask us to do so? Somehow this doesn't sit easy with me because God still gives blessings to those who hate him and pursues them with his call, but I have to think about it nonetheless.

What do you think?