You’re pointing out the difference of the “dispensation of Grace” does not mix with “being under the Law” or “the Kingdom Gospel” ~ Good for you!
Today the mixing of Law with Grace makes for confusion and the very things Paul warned against.
Like you state though, people don’t “feel” comfortable with Grace, because we’re so use to “let me do this to prove myself worthy!” … pride. Then get mad and offended if the Light of the Gospel of given to Paul puts it to the side and says, “Believe by faith … and that not of yourself, it’s God’s gift to us.” We can’t do it, but He could and did. We receive and walk it that Truth.
If ye have heard of the dispensation of the grace of God which is given me to you-ward:
1 Corinthians 9:17
For if I do this thing willingly, I have a reward: but if against my will, a dispensation of the gospel is committed unto me.
Whereof I am made a minister, according to the dispensation of God which is given to me for you, to fulfil the word of God;
That in the dispensation of the fulness of times he might gather together in one all things in Christ, both which are in heaven, and which are on earth; even in him: