I don't think anyone who does something evil thinks they're evil. Just as the Oblivion gates were opened by people who found Mankar Camoran's paradise a great enough gift to share with all the mortal races. I don't think Mankar Camoran would've allowed total annhilation, just the destruction of any opposition.
...snip...
People have said that Sloads are unique in the depth and extent of their amorality ... and this led to a general belief that they are totally alien. I wonder then what the Dwemer were? I saw individual Dwemer as personable and capable of emotion - but I also feel that the deeds of Kagrenac have somewhat prejudiced opinion towards the rest of the race - accepting that the ideas and beliefs/non-belief of those that followed him were self-destructive and nihilistic despite their yearning for something better.
With Sloads on the other hand we have a far more limited information base. The only personal contact has been with Ngasta who is deeply devoted to his necromantic enterprises and that is defined as evil by Dunmer and rejected by the Mages' Guild. Also the brush with Mannimarco at the end of Daggerfall was not reassuring when you consider necromancers. Not surprising that people would therefore see the Sload's activities as evil.
Consider that at the conclusion of WW2 the US set off 2 nukes ... but it is said the Sload tried to wipe out the total population of Tamriel and the Empire's response to destroy the actual, entire Sload continent as stated earlier.
In my view, although it is possible that this was in response to unrecorded or undiscovered actions of the Empire, it is all a bit over the top.
On the other hand, no one has actually asked the Sload what they feel about Sload Soap, which is made from young Sloads ...