Thing is, on the subject of dealing with the evil aligned, and those who commit evil acts, the paladin's code really has only one guideline:
"Punish those who harm or threaten innocent life"
Which can lead to some pretty interesting situations.
Here's a little sketch on the subject I drew up:
The characters are a LG paladin (Hero), a LN cleric of an LG deity (Villain), who has launched an inquisition to destroy evil- but also (very regretfully) destroyed innocents along the way- and an LE blackguard of an evil deity (Antihero) who commits evil with great delight and has only one major redeeming feature- a moral compunction against harming or threatening the innocent. The villain has the antihero cornered, and the hero has come on the scene:
Villain: "Ah, brave paladin. Help me punish this vile evildoer."
Antihero: "Yes, I'm a vile evildoer- I do evil and I love it. If you must punish me, get it over with."
Hero: (points at Antihero) "I'm not here for his punishment."
Antihero and Villain: "WHAT?!"
Hero: (points at Villain) "I'm here for yours."
Antihero and Villain: "Why??"
Hero: "Because he may be a vile evildoer..."
Antihero: "Kind of you to say so."
Hero: "Not helping."
Antihero: "Sorry."
Hero: "He may be sadistic and psychopathic..."
Antihero: "Hey, those are my best points!"
Hero: "Not. Helping!"
Antihero: "I'll shut up."
Hero: "Yet in all his sick and twisted career of evildoing, he has never once harmed or threatened the innocent. You. Have."
Hero: (draws weapon, points it at Villain): "Surrender now, and your punishment will be left to the authorities. Otherwise, we fight."