Ego is a concept from Freud's model of the human psyche. But there are many different models, which leads me to think we don't know much about our mind yet.

It seems from my perspective that the ego is responsible for creating a customized, artificial world designed to distract us from our purpose in life.

What we experience of the world is whatever reaches our senses. Which is necessarily different for every person. So in a way, we all live in our own world as created by our senses.

And allow me to point out that the thought that the ego distracts us from our purpose presupposes an external purpose! (external as opposed to whatever purpose we choose ourselves). To me this seems to run afoul of Occam's razor, since an external purpose is a much larger hypothesis than our ego distracting us from it!

Your thoughts on purpose also touch on the issue of free will, of which we might have less than we think (see also Neuroscience of free will).

That is a deep comment that required processing.

Please give an example of what you consider to be an "external purpose"?

I think of it as more of an internal process where each person plots out his or her own shortest path to what brings them joy.

In my opinion if you're not on such a path then maybe one reason for this might be that you've in some way surrendered to one or more of the many distractions the ego manages to throw at us on what seems like a daily basis.

I guess my latest take on it is that maybe the ego is something we all need to figure out how to transcend and manage without destroying.

With external purpose I refer to answer to the age-old question "why are we here?". The common belief among religious people seems to be that their god has a purpose for them. As you can guess, I'm not a big believer in either gods or external purposes.

A lot of people seem to feel empty without their life having an external purpose or reason. Personally it doesn't bother me. Let me quote Richard Feynmann at this point;

I think it's much more interesting to live not knowing than to have answers which might be wrong. I have approximate answers and possible beliefs and different degrees of uncertainty about different things, but I am not absolutely sure of anything and there are many things I don't know anything about, such as whether it means anything to ask why we're here. I don't have to know an answer. I don't feel frightened not knowing things, by being lost in a mysterious universe without any purpose, which is the way it really is as far as I can tell."

On the other hand I don't think that obstacles are purely caused by our "ego", as you call it. External obstacles are a reality, and one ignores them at their own peril.

(I hope this comes out coherent. Currently I'm enjoying listening to "Union" by Yes, which is somewhat distracting.)