Sorry I haven't been back to post, zulubump, I've been madly busy.
I think this is a very difficult passage, and the heart of the difficulty is 14.4 'I will harden Pharoah's heart, and he will pursue them, so that I will gain glory for myself over Pharoah and all his army; and the Egyptians shall know that I am the Lord.' On the face of it this makes God sound like a petty tyrant who is only interested in his own importance and who is going to to needlessly slaughter the Egyptians.
I would want to think about the situation of the people who were writing down this passage first of all. Exodus was written and reshaped from a number of sources during the period when the Jews were in exile in Babylon. The story of the captivity in Egypt was painfully close to their own situation -- Jerusalem had been destroyed, and they'd marched hundreds of miles over inhospitable territory to Babylon. And though the Babylonians were quite good to them, much less cruel than Pharoah is to the Israelites, they were still far from home and not in control of their own destiny.
So the story of the escape from captivity was an emotive one -- and perhaps this accounts for the vindictiveness that the scribes who wrote Exodus put into the story. Would you want to punish your captors? Would you want to see them destroyed as they had destroyed your country?
I think we also need to see that at the time this was written, people didn't have a psychological model of people's motivations at all when you look at the early books of the OT especially their motivations often are not described or they seem very simple, or very often, they come from God. God makes everything happen so if Pharoah changes his mind and decides to pursue the fleeing Israelites, that must be because of God. We might think of this more in psychological terms the desire for revenge on both sides is very strong but I don't think the original readers and writers thought like that.
Another thing to think of is that you can trace the development of how the Israelites thought of JHWH through the OT, so he begins as a God among other gods, and is particularly the God of Abraham and his descendants, and is thought of as being the God of a particular place and people, and especially mighty in battle when we say Holy, holy, holy Lord, God of power and might that's the residue of that idea of God as opposed to other Gods who were fertility gods like Baal and Astarte. So Israel's God is a mighty, warlike, powerful God and he's all that the writers of Exodus have. They're in a powerless, landless, defeated place, and all they have is the history that shows their God will defeat the enemy, is conquering and powerful and glorious. As the OT goes on you see that God changes from being just one among many, to the only God, to the universal God of all humankind but that's a long development.
A final thing to think about is that this isn't a God who floats above humanity, separate from them and concerned only with events in his realm -- no, he's intimately involved in human history, and endlessly, lovingly concerned with the actions of his people. But given the imperfection of his people, their endless propensity for mucking things up, their endless disloyalty and disobedience, their constant thinking they know best, he has to get his hands dirty (metaphorically speaking!) to get involved in human history. He gets involved in some very nasty episodes indeed.
But he has the longer view. Can God bring his goodness out of all the horror of death and battle and betrayal and oppression? In the long journey to his Kingdom, which we're all in exile from, how can we keep the hope that he has set before us alive through all the terrible things that happen in this world? Perhaps there is something in this story about holding onto the fact that even though we can't know God's ultimate purposes, and even though we may look at the horrors around us and struggle to see God in them, he is still there, leading us onward to his Kingdom.