Out of all the C.S. Lewis books I have read (14, including the Narnia series), this is the most difficult to read, and the most controversial.  This book is NOT for the feint of heart.  He argues against relative morality and in favor of absolute morality with no stops in between. Compelling arguments, though debatable. Most interesting part of the book (for me) was the appendix with "illustrations of the Tao," which included teachings from ancient Egyptian, Greek, Roman, Native American, and Chinese manuscripts.

Basically, Lewis was outraged by some English textbooks he had read, which included hidden philosophical agendas and "did not teach the letters."  He is in effect speaking out against what Richard Wagner calls "relativism," stating that the "to each his own" philosophy of morality is detrimental to individuals and society.  He presents arguments for absolute morality, similar to what you'd find in Mere Christianity, but does not actually cite Christianity as the source of his arguments.  (He more frequently refers to Aristotle, Plato, and other philosophers.)

Pretty heavy reading.  Good luck with this one, if you choose to tackle it.

He does not necessarily say that humans are good or evil.  What he is discussing is the actions -- more specifically, the morals we claim to live by.

Okay, either the Wikipedia author is misrepresenting Lewis's words, or you are misinterpreting.  After skimming the article, I think it's the former.

I looked up Lewis's reference to the waterfall in his book.  First of all, it is not "his" reference... it was a reference in one of the textbooks he was criticizing.  The authors of this textbook said, as quoted by Lewis, "What he was saying was really I have feelings associated in my mind with the word "Sublime," or shortly, I have sublime feelings."  Then the authors continue, "This confusion is continually present in language as we use it.  We appear to be saying something very important about something: and usually we are only saying something about our own feelings."  He then goes on to explain (in much more detail than I will here) that the feelings that would have to be associated would actually be opposites:  In order to think the waterfall is sublime, our feelings would actually have to be humble.  Furthermore, the big issue Lewis has is this:  "They have treated only one particular predicate of value (sublime) as a word descriptive of the speaker's emotions.  The pupils are left to do for themselves the work of extending the same treatment to all predicates of value: and no slightest obstacle to such extension is placed in their way."

So really, not that I have met Lewis or anything, but I imagine that he would agree with you that the waterfall is a very bad illustration of absolute morals, and it is this comparison that sets him off.