1. Paul is simply being inconsistent and this contradicts other statements he makes
2. The passage is an interpolation in Romans
3. Paul is speaking hypothetically of what would happen if someone really did "do" the law
4. The main point is the impartiality of God and the terms are introduced merely to underscore that point
5. It refers to Gentile Christians who fulfill the law
I have my own preference (5), but I won't go into that here. What I want to do is set forth a criteria upon which one can assess the various options for understanding Rom 2.12-16 within the context of both Romans and Pauline Theology. Any solution given for must explain the following:
(1) The meaning of judgment according to works in second-temple Judaism and the degree to which it is a foil for Paul’s own views.
(2) The context of Rom 1:18-3:20 as a negative indictment of the sin of Jews and Gentiles.
(3) The emphasis upon the impartiality of God and the false presumption of Jews in their elect status in Rom 2:1-29.
(4) The outcomes espoused in Rom 2:12-16 are categories of justification and condemnation respectively.
(5) The identity of the persons described in Rom 2:1-16 (“one doing good” v. 7; “one who does good” v. 10; “doers of the law” v. 13; and “Gentiles” v. 14) and in Rom 2:25-29 (e.g. Jews, Proselytes, Pagans, Christian Gentiles).
(6) The identity of the law in Rom 2:15, 25.
(7) The relationship between faith and works as the basis of justification in Pauline theology as a whole.
Finally, I leave you with a quote from Joseph Fitzmyer:
This Pauline message of judgment is what the Christian needs to hear first, and in the light of that message the message of justification by grace through faith takes on new meaning. It is only in light of divine judgment according to human deeds that the justification of the sinner by grace through faith is rightly seen. Hence there is no real inconsistency in Paul’s teaching about justification by faith and judgment according to deeds.
Fitzmyer, Romans, 307.