Well, if we’re going to adequately respond to this, let’s first dump out a few standard characterizations of God: omnipotent, omniscient, omnibenevolent; that greater than which nothing can be thought; the most real being (ens realissimum); being itself (esse ipsum); the first efficient cause of all that is, the final end of all that is, and the exemplar cause at work in every creature.
And now let’s grant, on top of this, the reality of hell and the possibility of eternal perdition.
(Note that whether or not there is a hell has nothing to do with what we wish were the case . . . and that those who would accuse theists of wish-fulfillment typically overlook this aspect of theism, which makes the eternal night of the dead atheist look a whole lot more attractive in comparison.)
Now, clearly, hell as a manifestation of divine malevolence is out, because God is omnibenevolent. And also because God as the highest good: God is not capable of spite. (Note that this does not signify a limitation on God’s part. Rather it lies in the nature of the virtues. To be more virtuous is to exist more fully. If God were not to be fully virtuous he would not fully be, and so could not be the fullness of being.)
Also, the reality hell couldn’t be irrational, if it has a place in a God-ordained reality. Nor could the question of who ends up in hell have an irrational answer, if a God-ordained reality is ultimately just.
So who goes to hell? A fundamentalist might tell you that anyone who has not accepted Jesus into their heart. But this would not be just, given that there are oodles of people who, through no fault of their own, have never been exposed to Christianity, and moreover, many who have been exposed have not had it adequately explained. Or perhaps never seen anyone genuinely live out a Christian life. I wager there are a lot of Westerners in this latter category.
On the Catholic understanding we would expect those who have, in fact, been given credible examples of faith and adequate instruction in the faith, and go on to reject it in the form of gravely immoral acts done in full knowledge and full consent — these we could expect to see in hell. Other than that, we might expect to see in hell those who have not followed the light of natural reason and the natural law written on their heart.
So has God set up a bunch of arbitrary concepts and commands, and a place of eternal suffering for those of us who don’t make the cut? A pre-eminently rational God would not ordain articles of faith and morality that were not for our own good…
The main point is this: hell is chosen, not assigned. This follows from the nature of love. God is a relationship of love who calls us to participate in his inner life, in that relationship of love. But, as with human forms of love, choice is a condition of love. In order for any love including the love of God to be genuine, it must be chosen freely, and so it's opposite, rejection, must also be a real possibility. Hell is, then, "a state of definitive self-exclusion from communion with God and the blessed." (CCC 1033) Emphasis mine.
Now God is our final end, our ‘beatitude’ - we are thus constituted to find our fulfillment in and only in God’s inner life — we shall never find complete and lasting satisfaction anywhere else. This simply follows from our nature. So to the degree we choose something other than God as our highest good (pleasure, honors, etc.), we can expect to remain unfulfilled. If we grant that the soul is immortal, then we must admit the possibility of being eternally stunted, remaining infinitely far from our appropriate end. In a sense, then, we might say that the reality of hell follows naturally from the existence of a highest, pure Good.
But maybe this is unconvincing. I personally would not wish hell on anyone. But then neither would I presume to be more just in thinking so than God himself. What to do with the tension? This no doubt has something to do with the finitude of human intellect. Not being omniscient, we are not remotely privy to goodness in its full expression, and we are similarly not privy to its privation, which is evil. We simply are not in a place to appreciate what is lost in the loss of the Goodness itself. In appreciating our limitations, we do well to note that “counterintuitive” is different from “irrational”. Or as Cardinal Newman put it, there is a difference between “difficulties” and “doubts”. Sufficient for our purposes is that the omnibenevolence of God and the reality of hell don’t contradict one another. Treading such grounds as these, it's natural to feel some tension, because hell, along with the Incarnation, the Trinity and Transubstantiation are strictly matters of faith, that is, things that can neither be proved nor disproved by human reason. We can appeal to reason in discussing these things, but with the realization that the most reason can do here is remove intellectual barriers to the assent of the will - and this is ultimately what faith is, a divine gift to which we can at best give our consent.
But let’s take one more pass at the opening question. Is hellfire reasonable? Does damnation make a sadist of God? I note in this question a hidden appeal to absolute standards of goodness and rationality against which God ought to be measured: God shouldn’t allow hell, because that is cruel, tyrannical, and whatever else. But in calling upon such absolute standards one in effect calls upon the very thing one wishes to disprove. For where, other than in God, would we find such an absolute standard?
But here's one pretty rational thing about hell: if someone is entirely wrapped up in self-interest, and only has ears for that which is to his own benefit, what could possibly shake him out of this...except an appeal to self-interest? And what greater appeal to self-interest could there be than the prospect of eternal suffering? Hell is "an urgent call to conversion". (CCC 1036) A mysterious one, an awful one. But one you can't wish away.