Vivec's a monster, yes. He's so powerful, and so utterly transcends reality that he considers himself-perhaps rightly, above even the concept of morality. However, he's a benevolent monster. Yes, he's done horrible things, but he's also helped the Empire-And the Dunmer-immensely. He's basically an benevolent dictator taken to highest possible extreme. And...as for what he did to Azura. There is no such thing as a good Daedra. Conventional morality doesn't apply. To them, all mortals are toys, pawns. She's one of the nicer ones. For a Daedra, that means that she only horrible torments some of her "toys." And they usually deserve it. Usually. Still, all Daedra treat mortals the way five year olds treat a doll-house.
What, exactly, WOULD a moral god do, then?
When thinking about morality, I always like to make a reference back to Gulliver's Travels. In one story, Gulliver meets the Lilliputians by accident when he steps upon one of their towns without realizing what he had done. The Lilliputians see this as an unforgivable attack, but Gulliver did not realize his crime until after he was forced to confront the ramifications of his unwitting actions. When one becomes a giant, merely walking without looking where you are stepping suddenly becomes an unforgivable crime. The moral standards are raised impossibly high.
Compare this to an ant's morality. An ant follows its pre-programmed instincts to do the tasks that the nest presumably will need done. It will give its life for its nest not because it faithfully and willfully giving of itself for its fellow ant, but because it doesn't know how to do anything else. How, then, can we judge a moral ant from an immoral ant? If the ant had no choice in the matter, how would we know the ant would sacrifice itself if it did have a choice? What if it would have enjoyed going on a murderous rampage through its nest, instead? Morality is judged upon the choices that a character makes, and without choice, there is no morality.
Compare this, then, to how people behave in society where, rather than relying upon the good moral standing of humanity (*HA!*) we rely upon the Rule of Law and punishment to deter harm towards others. I have read psychological studies that stated that roughly 40% of people behave "morally" simply because of fear of being caught, and that in fact, 3% of the population is actually clinically psychopathic. That is, they are incapable of understanding or sympathizing with the pain of others, and seek only their own personal betterment. They simply are not the sort of psychopath that actively enjoys killing people, and in fact, many of them are actually rather attracted to business and finance and "making a killing" in the monetary sense. They do not kill and maim not out of their own moral compulsions, for they have none, but because they simply do not see it as a profitable thing to do, and they fear the consequence and backlash for their actions.
Morality, then, is not what one does all by itself, but what one does
when they have the power to get away with it.
This is why your typical superhero comic black-and-white morality play will always have to come down to asking "What are you in the dark?" Because even a villain can see the use in good publicity when the spotlight's on you. Many villains, in fact, use good PR as their primary defensive measure.
Compare this, then, to our own actions as players in these games, where our actions have few consequences, and really, none we cannot simply quick load away. We can murder everyone in the town square just for a laugh. Many people do, when they get bored with everything else in the game. We may be, at our best, benevolent to the ones who treat us nicely, but any creature that comes out attacking us, you better believe we will enjoy making explode in the way we find most personally amusing. In fact, many players here will take it out on the whole empire they spent the last few games protecting because one Imperial captain thought she should kill the player's character just to be safe in the intro to Skyrim.
So finally, compare this to a god - someone with no, or at least, as few negative repercussions for their actions as possible. If Gods were put on the same moral judgment standard as players are, Azura would be considered a "wussy" player for letting mortals get away with so much. The typical player might share more if his/her morality in common with Molag Bal. Azura treats people that are kind to her with kindness. Azura treats people who are cruel to her with cruelty. That's actually a balanced, rational mode of behavior, and it is difficult to be more benevolent than that without inviting upon yourself all manner of attack for lack of fear of the consequences. Perhaps no bleeding-heart saint, but I would certainly still classify that as generally good.
What then, IS "good"? If you cannot come up with a clear definition, or simply say that nothing is good, so it doesn't matter, then you have functionally done as you have stated Vivec has done, and declared morality irrelevant.