I suppose it would be an extreme game design challenge, but I would play more evil characters if I didn't have to play as "stupid evil".
I want to be a manipulative monster who preys on trust. Of course I'm not going to punch the begger in broad daylight in front of everyone. I want chat him up, gain his trust, and give him a drink laced with medical alcohol so I can then steal his pocket change.
Nothing brings me more joy than to enslave a couple, put them into a tiny jail, forced to breed forever and watch as their children are taken down a chute and become slaves until the end of time.
Making it worse is that many games don't punish you for things we'd consider pretty "evil". Like, you can walk into people's houses and search their cupboards and other containers for useful things, and it's mostly not considered stealing. So, as long as you choose the nice dialogue option when talking to them you stay good.
A real good vs. evil choice would be one where resources are always tight, and you constantly meet people who need your help along the way. Helping them stretches your resources even more. Or, have people who are able to help you, but you have to stretch the truth about who you are or about your goals to get their support.
My experience in the STALKER games is like this, even though the game has no built in meter for these actions. Sometimes I will see a group that I naturally feel friendly to in a fight. I can join and help, I can actively hinder them (often a "stupid evil" choice if they are against strong enemies who will either fight me or block me from looting), or I can sit back and do nothing.
Doing nothing can be interesting since it can net me decent loot for simply waiting. Makes me feel like Mad Max in the beginning of Road Warrior where he watches the raiders fight but is disinterested in helping.
Witcher 3: Tell peasant he can keep his 20 crowns for his daughter. Proceed to loot all his precious gem stones and ore right in front of him and his sick daughter.
I want to play a game as a Machiavellian figure with good intentions who struggles over the course of the game to maintain the deceptions keeping everything running. The game shouldn't present anything as good or bad, but rather an accumulating, eventually overwhelming amount of context for any given decision.
EVE has fantastic stories, but I'd never want to play it myself. The people who did stuff like the bank scam put in so much time in front of spreadsheets it was like a real job.
God damn. That fucking guy who ran the bank genuinely for years and then one day just closed up shop and fucked off might be the wildest story in gaming history.
Not at all. One example is the Romeo and Juliet quest, as a good character you can help their families understand each other, they get together and everyone is happy. On the evil side you can make everyone go to war, even the couple, by conspiring, you watch them kill each other then loot everything! Just one of the quests I think the evil side is way more interesting than the good one.
The vast majority of evil paths is like that in KotOR
Kinda the point - that was pretty pointless evil. Also the slightest bit of critical thinking would suggest it's a really bad idea, what with the Jedi keeping a close eye on you. There's no way they don't know you influenced that, they just don't call you out on it cause they're manipulating bastards that are trying to use you still.
The end of that one is good cause it gives a really good reason to go dark side - the bullshit the Jedi did to you. The dark side ending of KOTOR is incredibly satisfying because of how much the Jedi deserved to be stabbed in the back in that game.
You're going to really like what the future of gaming is going to bring, but be careful what you wish for, as along with the mechanics you want being able to exist, the ways in which you'll end up being impacted by those actions is going to mess with your head like nothing you've seen before.
Some games like Eve or Factorio have backstories that make it clear the player sucks. Capsuleers are immortal but the rest of the crew isn't. The Factorio engineer lands on a strange planet, pollutes the hell out of it and kills the natives.
Then there are games like KOTOR or Pathfinder:ROTW where the evil path has you make some pretty fscked up dialog decisions.