My beef with Sanders is that he doesn't seem to accept the Gospels as reliable history --while they contain some good information, they need to match what we know from other sources, not vice versa.
Also, I think he fails to make a simple distinction. Of course Judaism was a religion of grace --if you consider Judaism as the system God gave. But the prophets frequently critiqued the way the Jews practiced their religion. So it would be perfectly possible to have a Simeon, who is Jewish and lives under grace; and to have a Pharisee like Saul of Tarsus before his conversion, who is Jewish and lives under law.