I wish to take issue with two notions that popped up in this thread. First, the idea that in 1e, Alignments were static, so that an alignment assigned to a group meant that every member was that alignment, without exception (i.e. all Orcs are Lawful Evil). In the 1e Monster Manual, Halflings are listed as Lawful Good. So if we accept the premise that all Orcs are Lawful Evil (in 1e), then logically all Halflings must be Lawful Good, since that's the Alignment listed for them. But wait! The Player's Handbook allows Halflings to be Thieves, which in 1e CANNOT be Lawful Good! Clearly, the Alignment listed for them in the MM represents the TYPICAL Halfling - not ALL Halflings. So the Alignments listed in the early books only indicate the Alignment of a TYPICAL Orc, Goblin, etc.
The other idea I disagree with is the idea that treating Orcs (or whatever) as individuals and judging their Alignments by their actions rather than their race is somehow "moral relativism"; to me, it's just the opposite; an example of moral CLARITY. If a Paladin (who in 1e can actually check the Orc's Alignment at will to see if it is Evil) cuts down an Orc simply for the "crime" of being an Orc, THAT is moral relativism, turning morality into a mere game of "our side" vs. "their side", with actual ethics left at the wayside. In 1e, Half-Orcs could be PCs... would a Paladin be entltled to kill them on sight? I'm not talking about a situation such as a battle where there's no time to make such judgments, and the Paladin is just defending himself, or accidental killing of a Good creature (i.e an honest mistake), but situations where the Paladin has time to make a judgment. For instance, say the Paladin rounds a corner and bumps into an armed Drittz. Thinking he is about to be killed, the Paladin strikes first, thinking Drittz is just another Evil Drow. O.K. honest mistake. Now suppose the Paladin sees Drittz at a distance, binding the wounds of a Gnome or otherwise not behaving in an Evil manner (or actually doing Good). Drittz turns and hails the Paladin, requesting his aid. In this case, the Paladin has no excuse for not checking the Alignment of Drittz, since he's clearly not under attack. (End of rant.)
In any case, eliminating Alignments does nothing to eliminate moral issues from the game, UNLESS the DM simply ignores morals altogether and allows the PCs to do whatever they like without consideration of good and evil. Even in GURPS, with no Alignment system, the "Orc babies" problem will turn up if the PCs have a conscience.
As to the statement that the D&D game assumes Medieval morality, that is only partly true. It also draws heavily on the morality presented in fantasy fiction, where the heroes, if not actually Good-Aligned, are at worst Neutral (and even then, only rob and kill Evil foes). You never see Conan or other morally-ambiguous characters commit rape, for instance, nor do they engage in slavery, etc. In short, their behavior assumes SOME modern moral assumptions.