That was a reasonable length spelguru post. Let's see.
How will the game decide if auras are evil/good? They can be linked to evil/good auras in the aura editor now... but as for absolute morality, that will need to be decided at the universe level somehow... when I do gods and metaphysical stuff. Action judgments will probably work the same way. The universe will need a list/something of prohibited/encouraged actions. These could be different for different religions/civs, but there could also be another list for the universe, that corresponds to whatever is "correct", like, which religion was right. Or they could all be right. Or wrong. Or rightish.
As for the deer/hunter set up... the game will probably choose to leave the morality of actions unassigned in most cases. If the person targeted the deer (through the game interface), then the morality of the action is clear (unless killing animals is forbidden, etc.). Other things like self-defense can be assigned based on the universe morality assuming the game can detect self-defense. That might be hard... how much time has to elapse before a now-peaceful creature that attacked you is morally unattackable? Crap like that. Also, since the game can read the minds of all non-player creatures, it will have to be careful not to let the player gain morality points for accidentally killing an evil creature that the player doesn't know is evil.
I guess the main point is that whatever system I come up will be abusable and bad. I'll just have to try my best. One thing is clear... morality will vary between universe, like everything else.
Incidentally, an adulterous great paladin of goodness is probably like, not good or great. He can still kill you though, so it's really a moot point.
You can make dragons however you want, or get Denim to do it when he's not busy and the game is further along. In my own stock universe that I put out with the game, I'd probably have a range of intelligences in dragon-like creatures. Or a range of stock universes provided with the game, really... enough to suit the major taste groups among people who don't want to use editors. People who can handle a few simple slide bars will open up enough personal customization through the universe editor, once I make it.
Ideally, I'd like to have the option of having dragons be whichever of those flavors you like. Then I'll code as many of them as I can before I'm dead. That's how it works. I'm not set on anything. I want the experience to be completely mutable. Or it will be like Morrowind with worse graphics, and I might as well program curses games all the time. Eventually, some game studio with 50 employees is going to nullify Armok with an actual good game, anyway. Then it'll be Primordial Souper Star, 24-7. Yeah.