In my justification article I show how the Catholic perspective is the most Biblical and logical:
http://catholicdefense.googlepages.com/article.htm

This “Confession of Faith” was the product of English Calvinists writing in 1646, more than a century after Calvin’s death. When I speak of classical Protestantism, I mean the original — Luther’s (d. 1546) and Calvin’s (d. 1564). It is the nature of Protestantism, being a human invention, to be subject to what all creatures are subject to: change. As a result, Protestantism — even the “Reformed” variety of those generally adhering to Calvin — has numerous variants. (For proof, I offer the fact that “Reformed Baptists” and “Reformed Episcopalians” disagree on whether Baptism ought to be administered to an infant. Considering the dogmatic ramifications of this issue, it’s not a trivial thing.)

Neither Luther nor Calvin believed that justification produced true inward sanctity. Luther spoke of “imputed justice” and made the vulgar covered-dunghill illustration of it.

Consider this: Calvinists believe that Sanctifying Grace (justification) cannot be lost, not even by mortal sin. (This is part of “five-point Calvinism” — the “perseverance of the saints.” Now, if they add to that a belief that we are truly made inwardly holy by grace, then we have the monstrous conclusion that one can be an adulterer and truly inwardly holy at the same time. No conversion from sin is necessary, because “fiduciary faith” is all you need (sola fides). That concept of holiness is not the Christian concept. It is beastly.

Luther happily made this notion of “sanctity” explicit: “Be a sinner and sin boldly, but believe and rejoice in Christ more strongly, who triumphed over sin, death, and the world; as long as we live here, we must sin.” Elsewhere: “If adultery could be committed in faith, it would not be a sin.” See the above mentioned article for references.

You can find a brief critique of the early Protestant notions of justification, as well as Protestant criticisms of Luther’s and Calvin’s extreme positions, in the Catholic Encyclopedia article on Justification:

http://www.newadvent.org/cathen/08573a.htm

I shared your article with a Protestant friend of mine, and he disagreed with your statement that “the “classical” Protestant answer to the question asked above is No: There is no change of our inner nature.” He provided me the following support for his position. Could you please respond? Thank you very much, and God bless.

Westminster Confession – Chapter 13: Of Sanctification by Westminster Assembly

I. They, who are once effectually called, and regenerated, having a new heart, and a new spirit created in them, are further sanctified, really and personally, through the virtue of Christ’s death and resurrection, by His Word and Spirit dwelling in them: the dominion of the whole body of sin is destroyed, and the several lusts thereof are more and more weakened and mortified; and they more and more quickened and strengthened in all saving graces, to the practice of true holiness, without which no man shall see the Lord.

II. This sanctification is throughout, in the whole man; yet imperfect in this life, there abiding still some remnants of corruption in every part; whence arises a continual and irreconcilable war, the flesh lusting against the Spirit, and the Spirit against the flesh.

III. In which war, although the remaining corruption, for a time, may much prevail; yet, through the continual supply of strength from the sanctifying Spirit of Christ, the regenerate part does overcome; and so, the saints grow in grace, perfecting holiness in the fear of God.

The Westminster shorter catechism states justification and sanctification this way.

Q. 33. What is justification?
A. Justification is an act of God’s free grace,[91] wherein he pardoneth all our sins,[92] and accepteth us as righteous in His sight,[93] only for the righteousness of Christ imputed to us,[94] and received by faith alone.[95]

Q. 35. What is sanctification?
A. Sanctification is the work of God’s free grace,[97] whereby we are renewed in the whole man after the image of God,[98] and are enabled more and more to die unto sin, and live unto righteousness.[99]