This text has been read about 6 or 7 different ways. Doug Moo has a very helpful summary of all of them in his commentary of Paul's letter to the Romans. Only 2 of those readings will concern us. One, the historic Reformed reading of the text (surprisingly not Calvin's himself) , and the reading I will take in which I have followed essentially Tom Schreiner, N.T. Wright, and Calvin (although Calvin does not spend quite as much time on this text as the other two, and leaves some loose ends untied). I will articulate briefly the first, and then defend my own. Historically, the reading that has come from our tradition has said that the promise in verse 7 of eternal life for those that seek, "glory and honor and immortality (Rom. 2:7)" is a legitimate, and real promise. The problem is, that sin has made it impossible for anyone to actually meet their side of the agreement. This is, so to speak, the way to "get saved" apart from Christ. The inverse is, that everyone who is selfish has, "wrath and fury" (Rom. 2:8), to look forward to. Of course, everyone is selfish, therefore, all who do not have Christ to absorb the punishment for their selfishness will have to absorb it themselves eternally. Paul is, then, setting up a hypothetical way of salvation for those who are apart from Christ that he will eventually tear down. This view takes into account Rom 3:9-20, which in the structure of the argument is quite close to our text, and is therefore crucial. Paul says, "no one does good, not even one (Rom. :12)... by the works of the law human being will be justified in his sight, since through the law comes knowledge of sin" (Rom. 3:20). The problem with this interpretation is that while it makes sense of some of the context, the text itself says nothing whatsoever about it being hypothetical. As was said before though, if this reading is not retained, it seems to be in conflict with the 3rd chapter of Romans. But, if Paul appears to be muddled, the reader has not read enough of Paul, who continually holds things together that at first glance appear to be internally inconsistent. The role of works in the life of a Christian, and the doctrine of justification by faith would be a prime example of that. "Paul elsewhere teaches that works are necessary to enter the kingdom of God" (1 Cor. 6:9-11; 2 Cor. 5:10; Gal. 5:21)(Schreiner Romans 115). The fact that Paul states that works will play a part in final judgment, in other places that cannot be written off as hypothetical, demonstrates that this text does not contradict the next chapter of Romans.
Now, the question still must be answered what exactly do these good works do? Or, what is the incentive for performing them? This is where I think N.T. Wright's discussion of the role of works for the first-century Jew is helpful, and is potentially similar to the way Paul would have viewed good works for the Christian. "The 'works of Torah' were not a legalists ladder, up which one climbed to earn the divine favour, but were the badges that one wore as the marks of identity, of belonging to the chosen people in the present, and hence the all-important signs, to oneself and one's neighbours, that one belonged to the company who would be vindicated when the covenant god acted to redeem his people. They were the present signs of future vindication" (Wright The New Testament and the People of God 238). This was, of course, the way that first-century Jews viewed obedience, not necessarily the way Christians viewed it. There does not have to be continuity between the two, but it is probable that there was. For the sake of brevity, we can all squabble about that later. Works then, in the context of final judgment, are the badges that demarcate believers. The process of final judgment will be more than an angelic secretary shuffling through the file-cabinets of the Lambs Book of Life to find a name. The Lambs Book of Life will be worn on the sleeve's of those that are in Christ. These works do not make someone in Christ, in the same way (to use a disturbing example) that the yellow star of David that was worn by Jews during WWII did not actually make them a Jew. It merely demarcated them for the gestapo, and in that sense was linked to their final judgment. In Romans 2 the man who seeks for "glory, and honor, and immortality", is still given eternal life. In verse 28 it is clear that this person is one who is circumcised, or the one who has a pure heart has it by the Spirit (Rom. 2:29). The good works that are done, in this life, will be done by Spirit-filled Christians, and will be profoundly monergistic. Left to their own devices they would be in the category of Rom. 3:11-18, with the Spirit, though, they fall in the category of Rom. 8:4. But, to say something like, "when you get to heaven don't even mention your work's, just mention Christ's", is simply un-Pauline. It would not be appropriate, or wise to stand before the judgment seat of Christ, and boastfully go on-and-on about all the widows and orphans you took care of, and I contend that imputed righteousness plays an ever-important role here, but I think it is clear that the alien-righteousness believers possess, contains visible qualities (cf. Phil. 3:7-11). To say that this is forsaking the gospel is an adventure in Sproulian point-missing.
In conclusion, how is this to be exposited dramatically? First, this is exactly how doctrine puts its walking shoes on. It is interesting to note that when Paul talks about doctrine that is unsound in 1 Tim. he doesn't mention Arminianism, or Sabellianism, or Gnosticism, but says that the law is laid down for, "the lawless, and disobedient, for the ungodly and sinners, for the unholy and profane, for those who strike their fathers and mothers, for murderers, the sexually immoral, men who practice homosexuality, enslavers, liars, perjurers, and whatever else is contrary to sound doctrine, in accordance with the glorious gospel of the blessed God" (1 Tim. 1:9-11). Right doctrine's primary antecedent is right living, according to the gospel. Secondly, to retain Vanhoozer's theatrical metaphor, good works are the costumes that identify the protagonists in the Drama. Once again, the costumes do not make the protagonists the protagonists, the Director did that. But, he prepared the costumes beforehand that they might wear them. Thirdly, these "costumes" happen to do more than demarcate the heroes, although they do not do less. Good works are an integral part of advancing the Cause of the Director, and moving the Drama towards its comedic end. The pseudo-protagonist who shows up at the curtain call without his costume on has not played his part, and will be shown to be no protagonist at all.