Another problem that I have with factions is the assumption that people choose to join them. Meh. Maybe, maybe not even if they were not conscripted.
Trying to stay away from real world politics too much, but most people who are religious follow the same religion they were raised in. If I was born in Minnesota and my parents were fans of the Vikings I'm probably going to be a fan of the Vikings if I follow (American) football. A Vikings fan may be a fan of an individual player on another team, but they're probably not going to suddenly become a fan of the Packers.
So if you look at religions as a valid faction the majority of people don't really choose, they're born into it. This is even more true in the day and age before modern communication. If you were born into a community that worshipped Pelor, you probably worship Pelor and all other gods aren't even a consideration*.
It's also true for what country you fight for, who you consider your enemy, standing on various issues such as personal rights versus societal rights, on and on. Even things like slavery. If you grew up in a culture where slavery was the norm, IMHO whether an individual fights to abolish slavery should not be a litmus test for whether someone is good or evil. Sadly, when I was growing up I was taught that many slaves were well cared for and relatively happy (small town, older teacher). If that was the only message I heard my entire life, my opinion on the subject may have been misguided.
But again, the game doesn't need to model real world morality. I don't think it should even try to do so as the base core assumption.
P.S. If you don't think sports fans are religious about what teams they follow I'm sure you could find some youtube videos that seem to prove otherwise.
*
In the real world most polytheistic religions didn't really have a single god that they worshipped, although some like the Greeks had patron deities for their city. Worshipping a single deity out of many wasn't normally a thing.