Why does the Church keep the worst sinners at a distance by denying them Communion?

The Church does not hold sinners at arm's length; they do so themselves. The Church does not force anyone to sin. Nor does it withhold the Lord's compassion any more than he did, but his compassion was for those who repented, and he warned them not to sin again.

While waiting for your annulment, you could have received Communion if you were not having relations with someone to whom you were not validly married. Perhaps you did not know that doing so is a grave sin. One cannot profess unconditional love for the Lord while engaging in sin. You could have gone to confession and resolved to live as brother and sister until you were validly married, and then received Communion. Many do; unfortunately, priests often fail to tell people this.