Oh, I agree, but it just puts a hurdle in front of the players since the DM can define "the Teachings of the Great God Poobah" as anything they want, but it's harder for the DM to define "good" as anything they want without getting some player push back. I'd have no problem with what the DM is doing personally, but I think that saying "in this society X is good" is a harder sell than "in this society people usually do X" since a lot of people have a hard time accepting "good" having a different meaning in different times and places.
I see what you are saying. The DM really didn't say this society is good what she said was for the most part this society does tend to be lawful and the King tries to be a good and fair ruler.
The argument came up that if a King allows evil clerics to be killed then the society is an evil one or the fact that criminals are made into indentured servants and that indenture is sold then that is a form of slavery and the society is evil for allowing it.
It was very black and white thinking.