I've not finished the mage guild quest in 'Oblivion' (and I'm selectively reading about it to avoid specific spoilers), but as I understand it people believe that Necromancers are portrayed as pure (objective) evil in Oblivion. Well, from the guild's point of view, sure, evil is after all subjectively defined, and as such 'Oblivion' is not any less relativistic on its take on evil; even the province itself may define necromancy as evil - we're in cyrodiil after all - and it's my understanding that the empire is not too fond of necromancers.
There are countless of real life parallels to moral relativism - 'the west' vs. 'terrorism' beeing just one. Neither 'terrorists' nor 'the army' define themselves as evil, in fact most (if not all?) people see themselves as 'good'... Which view prevails are in large a matter of influence, power and self interests.
Living in the sphere of influence (Cyrodiil) you'd be hard pressed to find the province embracing the moral relativism of "evil" - in this case relating to necromancy....
No one here is arguing moral relativism. Moral relativism itself is an inherently flawed ethical theory; it's nothing but a giant contradiction. Either ethical nihilism is being argued or skeptical absolutism, where it is acknowledged that moral codes occur naturally yet it is denied that we will ever prove them.
Further, assuming that everyone in Cyrodiil finds necromancy to be abhorrent, we can say that all of Cyrodiil subjectively feels that necromancy is evil. However, here's where real-world philosophy and game design tactics intermesh. Because the game only portrays Cyrodiil, then our game, regardless of whatever else is known in the lore, presents necromancy as objectively evil in the sense that no other conclusion can rationally be reached. It's why so many of the arguments put forth either involve metagame understandings such as the dreamsleeve, or known information as displayed in other games.
And the beginning assumption is tenuous at best. Even in Oblivion's portrayal, the only people who actually care about the necromancers in the slightest are the Mages Guild. And Oblivion's portrayal aside, it's not only unbelievable that every single necromancer in the province is going to rally to the cause of Mannimarco, it is Boring and Therefore Wrong. You say yourself (correctly) that no one thinks of themselves as evil, and that everyone arrives at their actions as the result of semi-rational anolysis, regardless of its veracity. Oblivion's portrayal of necromancers provides no rationale whatsoever, beyond begging-the-question "They do bad things because they're evil, and they're evil because they do bad things" logic. There are no necromantic manifestos or literature that explain the why's, the motivation, the inner philosophy. There is no spectrum within the necromancers themselves; they are all clones of one another in terms of their actions and supposed beliefs that we are not given. In fact, there is no given motivation whatsoever to the KoW's actions of attacking the guild and wanting to remove it. So while no-one thinks of themselves as evil, Oblivion sure doesn't give a lot of evidence to support this for the necromancers. It's not that we want everyone to suspend judgment in the Imperial Province; that's not it at all. It's that if you're going to flesh out Group A's dislike of Group B, then you'd better flesh out Group B's defense and rebuttal to Group A's dislike just as much.
And finally, necromancy is perfectly legal within the Empire. Grave-robbing is illegal, but necromancy is perfectly legal. To be a necromancer, you just have to get your base material from legal Imperial sources (and they have in the past). If Cyrodiil were so up-in-arms about it, then they'd have made it a punishable offense a long time ago, and the common non-mage citizenry would actually have something to say on the matter en masse.