Alignment: I've semi-ditched it. Alot of what your doing is similar to how my Ravenloft campaign is structured in terms of how fear works; you can't not have fear in a horror setting, nor can you be immune to the kind of terror that has your bones try to crawl out of your skin. You lose all the investment of being in that setting in the first place. Heroes of Horror is doing things very similarly. You might also include:
- Tainted Areas which make turning undead that much harder (better saving throws/negation of die rolls).
- Ravenloft specifically tells us that alignment is indecipherable; you can't detect good or evil, so the entire thing is bunk. The Protection circles just don't exist; I yield that you make a good case here for simply being "protected" but your players might get too much mileage out of it, hard to say.
- However, I split the difference. Everyone still has an alignment because I'm a big proponent of positive vs. negative energy. We're embroiled in a discussion currently as to whether a Neg. Cleric should even be able to cast Cure spells, or summon Celestial Creatures; vice versa, a Pos. Channeler shouldn't be able to cast Inflict Spells or use spells with the Evil descriptor, even if they're Neutral.
It's a huge issue with the way RAW is phrased; if you're Neutral, you can summon (and cast) anything. I like having alignments for PCs, as it gives them something to build their character off of, instead of a strait jacket that constrains them. Basically, a snap shot of how you'll react in a given situation.
Smite Evil: This one is a dead giveaway, innit? Agreed, "Smite Enemy" is the way to go here; you're channeling your power and it manifests; if the target cons as a threat to you, kablam. Off goes Smite. Whose to say Good can't be on opposite sides?