Heaven or Hell -- No Gray
2 Nephi 2:7
Behold, he offereth himself a sacrifice for sin, to answer the ends of the law, unto all those who have a broken heart and a contrite spirit; and unto none else can the ends of the law be answered.
At the final judgment, when it comes to atonement, sanctification, and justification, I will be either in or out. I will not be partially forgiven or partially saved. Either I will be redeemed from the fall and my sins, or I will not.
Thus, the concept of a binary state--heaven or hell. No gray area exists between the two. Either I accept Jesus's payment for my sins, or I pay for them myself. Remember, once a person is cast into prison, he cannot come out until he has paid the last farthing or senine. And can he pay any farthings or senines while in prison? No. Punishment does not redeem a person or pay their debt. While the debtor is in prison, the lender remains unpaid, justice is unfulfilled, and they are in an eternal stalemate.
How foolish to reject the atonement of Christ and think one can pay for his own sins and ultimately free himself on his own terms. How short-sighted! The only way out of prison is to accept the atonement and allow Christ to pay the ransom. Some may be truly hard-hearted enough to stubbornly reject Christ's mercy indefinitely, but I suspect the vast majority of those in prison will come around sooner or later and give in to Christ's pleadings to let Him save them.
Nothing has been said here about degrees of glory. The first cut is salvation or damnation. Once a person accepts salvation, then degrees are applied, and kingdoms can be assigned based on how much salvation the person is willing to accept and the laws they are willing to abide.

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