I think you're wrong. You just think "Evil" = "World Domination" or that it has to exist in the player so it can exist in-game (i.e. if player is evil he doesn't play MMORPGs). That's far from truth.
Your character can be evil in PS, he can't just dominate the world. He can harm people for his personal gains, it's easy and it's daily done. Another thing that should be taken into consideration is that, like in RL, people are a mix of good and evil and not a coherent incarnation of it.
The part where you use in-game mechanisms is the part where you don't have witnesses, where you're cruel but not a lawbreaker and where you disguise your real intentions. No need to go OOC.
The reason why we go into off-topic endless discussions is because both me and Rinenud enjoy rhetoric and trying to sound smarter than the other. I gotta give Rinenud some internets today, because he pulled my leg like he pulled Frois after I warned him. Next time I shall win.