There is an important difference between something mentioned in the Bible and something that is said to be "Biblical."
Is idolatry Biblical?
Idolatry is repeatedly mentioned in the Bible in both the old and new testament, but no honest person would declare that idolatry is "Biblical" in the sense that it is an approved practice.
In a similar vein, baptism for the dead is mentioned. It is mentioned once.
It is not mentioned as an approved practice.
By what means does God save those who die without knowledge of Christ? The following passages deal with this question:
Matthew 5:25
Matthew 5:28-29
1 Peter 4:6
1 Peter 3:18
1 Corinthians 15:29
The apostle Paul used the practice of baptism for the dead as supporting evidence for the reality of Christ’s resurrection. Why would he use a false principle to teach a true one? Doesn’t make sense to see it that way.
There are legitimate doctrinal differences of opinion. People interpret the Bible differently. Some Christians say baptism is necessary. Others say it isn’t essential to salvation. Both use the Bible to support their position.
If one side that believes baptism is essential, then it is up to them to resolve for themselves how God will deal with those who die in ignorance of Christ’s atonement. If one believes that baptism isn’t necessary, then it is a superfluous question.
Mormons believe every person must repent and be baptized. For those who die in ignorance of Christ, they learn of him while they await the resurrection. Christ himself went there as the scriptures above mention to preach the gospel to them.
If baptism is essential, then God must provide away for them to receive it as well as us. Thus, we believe in doing proxy baptisms for those who died without the chance to know the gospel in its fullness.
If other churches have their own solution to the problem of those who die in ignorance, they’re welcome to it. There’s no reason to attack our belief if you believe yours to be true.
The real questions are:
Is baptism necessary?
Who can perform a baptism and have it be valid?
How is baptism to be performed (Immersion vs. sprinkling)
At what age should one be baptized (Infancy? Age of accountability?)
If baptism is essential, then how can it be realized for those who died in ignorance of Christ?
There is no unity among sectarian Christians on these points. Catholics believe one thing, Protestants another. All Protestants don’t agree on these points. All of them use the Bible. How is it you expect to tell Mormons how to believe when there is no unity or consensus on this particular doctrine among the sects of Christianity?
For us, baptism for the dead teaches us that God will judge us all mercifully and with perfect justice. No one is condemned for dying in ignorance. No souls were created for the express purpose of suffering forever.