quite simply, if we have the ability to fail, then that itself denies us perfection. a perfect being would not be able to be un-perfect.

I don’t think this is quite right. Ability and action are two different things. Once a perfect being actualizes an ability of imperfection then he/she/it isn’t perfect, but the fact that he/she/it was capable of the imperfection didn’t make it so. Thus a being could have the capacity for imperfection, yet never actualize this imperfection and so remain indefinitely perfect. Any imperfection, however, would make a being irreversibly non-perfect. Of course, humans clearly fit into this second scenario, as none of us are perfect.

but again, what is happiness? that may mean very different things for different people.

Excellent point.