Really the biggest problem with alignment, is it's so hard to properly interperate, i don't think my opions on alignment are 100% acuarte, i think they're pretty good and more importantly i'm on the same basic page with my dm and the other players in my group. What you really need to do is have a serios dicussion on the topic and make sure every one gets to gether as to what each alignment means. After that if some one violates thier alignment then they should be prepared for the conciquences.
Personnaly nothing sowers a game for me quicker than having the DM start banning stuff, especially when it so strongly impacts on character concept and roleplay. As a DM i sure as heck wouldn't think of doing that sort of thing to my players. The DM is god rule is all well and good, but to a certain extent it's one of the worst concepts the game has ever spawned.
I've played my share of CN characters and many of the other alignments as well. in fact i find the hardest alignments to play currectly are the lawful ones, especially LN. I prefer CN and CG to loose the optoin to play one of my favored alignments would suck.