What is wrong with my vision of karma? We are consciousness housed inside a physical form. We started off as the nothingness of the universe ... all potential. Then we were bound to this form just as someone capturing air in a bag. Although we are normally formless and all one big lump of consciousness instead of a bunch of individuals -
 this circumstance changes that. We are now identified as that bag.

That bag, our body, interacts with the universe and sets wheels and gears in motion every which way. Those movements ripple repercussions both onward and back as cause/effect. There is no "time lag" so a consciousness is just immediately changed and as long as that change deviates it from the whole then it is bound to be constantly reborn until it can balance out that equation. It can't just blend back into the whole again until it is neutral.

This make sense to me without being bound in mysticism. Where is it incorrect? Or is it? I really think I have something here.
From a Theravada Buddhist perspective, this theory suffers from the error of an enduring self.  It is dependent on their being a persistent consciousness or, at minimum, some sort of enduring higher self.  From a Mahayana perspective, this theory establishes an erroneous dichotomy between form and emptiness.  There is ultimately no distinction between the bag (i.e. the body), consciousness, and the universe.