I had decided to include some additional optional plot options which would later develop into an Elder Evil type of game situation.
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I also wanted to outline how lady Kaal was a political rival to this Lord, Jarmaath, and set her up as a social-enemy. To represent her as a bad influence, I had her cause a stalemate in the city council which prevented allowing the refugees in the city.
One of the players, the monk-paladin, took objection to the town guards refusing the refugee caravan entry. Guards indicated they were following orders. A ranking NPC attempted to mediate, and the entire town guard was accused of being non-intelligent, negligent, etc. The monk-paladin suggested that the party's role was completed, that they had delivered the refugees to the city, and if the city was as beligerent enough to refuse them entry then so be it.
I asked the monk-paladin whether following orders from the city council was lawful. He replied that it did not matter. I asked whether abandoning the refugees was considered heroic or good. He decided he would storm the city and allow the refugees entry by force. I asked whether that was wise.
And so our first disagreement began.
It sounds like you had set up an interesting situation here for the players to deal with. But I'm not sure why you tried to dictate the way in which the players responded. When I GM, I leave it to the players to choose what their PCs do in response to the situations I set up.
I think this is especially significant for the player of a monk/paladin, because of the alignment restrictions on both classes. If you as GM aren't prepared to give that player a fair bit of latitude in playing that PC, and feel the need to interpose your own interpretationof what s/he should be doing at every opportunity, I think you have a recipe for repeated and destabilising conflict at the gaming table.
A further complication is that you've made it very hard for the PCs here - they're stuck with refugees who they can't get rid of (a variant of the "what do we do with the prisoners" problem). If every option they canvass is shut down by you as GM, the players can legitimately come to feel that you're simply not interested in letting them play the game.
Later on in the city, I decided to introduce another one of these extra-module plot hooks. An inevitable appeared walking out of Kaal's manor. It appeared like a previous NPC, Tune was the name, but was not giving the obvious body language.
Here is where it all started to fall apart. The monk-paladin, not sufficiently convinced it was Tune due to it not acknowledging them. So he decides to trip it. I interpret this as an attack action and it is revealed that this fake-Tune is an inevitable. The contract on its belt is stolen by the rogue, and the party makes its escape.
This is interesting stuff in the game, the players putting the PCs into opposition against powerful cosmic forces. I don't see why this is a problem (again, I'd be pretty relaxed on the alignment stuff - I don't know any rule that says a monk/paladin has to cooperate with every lawful outsider they meet).
Soon after, the party finds that the inevitable is now taking on the appearance of one of them, the rogue, using a Disguise Self. They lure it to the cathedral.
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I end the night explaining how they had wrecked the cathedral, and how the divine casters/vow takers, suffered a horrible black out upon killing the inevitable.
The stuff about wrecking the cathedral sounds good to me. I worry a bit about the black out, because (to make the point again) this alignment stuff is fraught with potential GM-player conflict, and I don't see why you need to play it up. A different way to do it might be to have an ultra-LN NPC confront the PCs - although to be honest the wrecked cathedral, plus the refugee issue, is probably enough social adversity to be dealing with at one time.
The monk-paladin took great exception to this. They saw nothing wrong with their actions. I disagreed based on the fact they had stolen its scroll, and initiated combat with it during their first meeting.
Two things. (1) Trip is a non-lethal disabling attack, and I think this may be what the monk/paladin had in mind. (2) if the players think they've acted properly - here, defeating the outsider who was impersonating NPCs and PCs and whose motives they (the PCs) were suspicious of - I don't see that it's the GM's job to tell them that they're wrong.
If the players were having their PCs do obviously outrageous stuff that wrecks the game at the table - literally raping and pillaging, for example - then there might be a need to have an out-of-game talk about what sort of play you're all interested in.
But what you've described doesn't strike me as offensive to anyone's real life sensibilities. Given that, if the players aren't allowed to work out and act on their own view of what it is good and bad for the PCs to do in the gameworld, what are they there for? Surely playing is meant to be more than simply rolling dice.
My response was to chastise them in-game, but reward them with loot and XP. Consequences would be levied in the lack of that NPCs contribution to stopping a BBEG lurking in the shadows beyond view.
Without knowing more about this it's hard to comment. I know from my own experience that it is possible, as a GM, to successfully combine ingame adversity for the PCs with real life sympathy for the players. But if the players get the sense that the conflict with NPCs in game is just a thin veneer for the GM berating them for the way they're playing the game, then GM/player conflict is a likely outcome.
My question to you, dear readers, is what DMing policy could I have employed to provide an enjoyable game for such an individual?
I've tried to make some suggestions above. I've heard versions of this story many times before. My advice is always the same - having set up an interesting situation, the GM should let the
players try and resolve it (via their PCs). And also, don't let alignment become a source of derailment by using it as a stick to beat PCs around the head. If a player is sincerely interpreting his/her PC's moral commitments and acting on them, let him/her do so.
EDIT:
What is the difference between a plot, actors acting in the world, and a railroad?
It's not a railroad when it is the players, rather than the GM, making the important choices for the PCs. (What is important is relative to individual players. You can generally tell what choices are important for your players because they will get excited about making them and get irritated when you stop them from acting on them.)
Actors acting in the gameworld can be a contributor to the railroad, if the upshot is that the actions of those actors foreclose meaningful choices by the players (one example: the gods taking away the divine PCs' powers). Remember that the gameworld is the GM's construct. It doesn't have an independent existence. From the players' point of view, then, the excuse from the GM that "I'm not railroading you, I'm just playing the actors acting in the gameworld" can be pretty lame. Because the GM always had the choice of constructing a gameworld in which the actions of those actors
doesn't foreclose meaningful choice on the part of the players. (For example - a rival Lawful church, which is hostile to the anti-refugee council, and is also opposed to the inevitable's particular mission, could offer the PCs some sort of protection.)
Let them go off the rails, guards attack, find post justification to declare themselves morally sound...find even stronger forces against them, lose divine powers... That route only leads to me getting yelled at more.
Well, yes. But there are other ways to play out a game focused on conflict between the PCs and powerful cosmic forces. No one is
forcing you, as GM, to take away the divine powers of the PCs, or to muster such strong forces against them.
Another way to look at it, from the point of view of the players: why are the gods letting this city council deny access to the refugees, and apparently not punishing anyone for it, while at the same time punishing the PCs for tripping an identity-stealing outsider/construct? This suggests that the gods aren't really very good (and perhaps lawful only in a pretty hardcore LN sense). Which is then going to make it all the more galling to be told that they (the players) are in trouble because their PCs aren't being
good enough in their actions.
