Being a moral nihilist I would prefer for you youself to decide what is acceptable and what is not along with the npc's or factions to act accordingly via a fame or reputation system. Basically I want TESV to be morally ambiguous in the regard that a given action is not "evil" but that doesn't mean that say a city state won't still be pissed off at you for choosing to ally with another city.
Thats the exact thought I have. The game should not determine your characters morality, rather it should determine societies view of your characters actions.
Also, I hate the backwards forwards slider that karma uses. Fame and Infamy is good, because they are SEPERATE scales. You can be Famous and Infamous at the same time! Again, I bring up my reference of Robin Hood.
Let society judge you by your actions, this is fair. But a hero may have to at times do questionable acts to achieve his goal.
at the same time, someone who is 'evil' may do good deeds to those loyal to him, or if he (or she ) feels that it is appropriate.
There are more forms of moral allignment than 'Selfless Saint', and 'Sadistic Bastard'
EDIT
Another thought, 'Fame' doesn't nescisarily say you are 'good' either. Someone can be famous for achievments which they undertook for selfish means. Rockstars are famous, not because they feed starving children, but because society views them as individuals of great skill and talent.