If you’ve been looking into Catholicism you’re probably aware that the key difference is understanding grace, justification (declaring guiltless) and sanctification (made holy). Protestants understand the Scriptures as saying that grace is an undeserved gift of God that has saved us (Ephesians 2:1-10) from being dead in our sins. The “dead” part is important. We were dead in our sins, rather than merely sick. Moreover we have now been completely justified and sanctified before God despite being formerly dead in sins.
NIV 1 Corinthians 6:11 And that is what some of you were. But you were washed, you were sanctified, you were justified in the name of the Lord Jesus Christ and by the Spirit of our God.
The result of this is that we are already pure and perfect in God’s eyes not (obviously!) because of ourselves but because of the great gift of Jesus’ substitutionary death. He took our sins leaving us spotless (Colossians 1:21-23).
The Catholic view is different to this. Catholic teaching declares that grace is a substance that the church distributes in the sacraments. By co-operating with this “gift” you gradually increase in sanctification and justification. Humanly this teaching is understandable. We do not look very sanctified here and so it seems logical to argue that sanctification is a process within which we co-operate with God until we achieve complete sanctification. On this basis, purgatory is understood as the final step to sanctification, a time of cleansing suffering.
Of course - such a view must diminish the view of Jesus’ atoning death and his ability to cleanse us with his blood (1 Peter 1:18-19). That is why we reject purgatory, because it declares Jesus’ death insufficient.
With respect to 1 Corinthians 3, the important message from that section is that Jesus is the foundation (11). Hence our salvation, our good works all are built upon him and his atoning death. What we build will be tested on the last day “by fire” to see its worth. Our reward is to see our work (by this I take it to be people) last into eternity (what a reward) or our punishment is to see a wasted life. Yet our salvation is neither threatened nor enhanced by this suffering through fire. So human philosophy and ingenuity (such as purgatory) will be “burnt up” and disclosed to be empty on that final day. Being saved “as through fire” itself declares the builder is saved, perhaps “by the skin of his teeth” might be a more comtemporary idea. Nevertheless there is no punishment to be endured for those whose hope is in Christ.
I hope this helps.