As you say, it'll be interesting. My definition of "innocent" probably wouldn't be as stringent as yours--I think some neutral-aligned people and some combatants would be included--but I wouldn't expect most murderers or rapists to count as innocents for magical purposes. On the other hand...
A very good start. I feel sorry for poor Rakahn, dying among comparative strangers. On the other hand, at least his troubles are over; maybe I should be feeling sorry for Falco, instead.
Re: The Fiendish Oerth Game Story - part 1c
Now that's something you very rarely want to hear. Especially when you're 2nd level.
Interesting story hour, Quasqueton. I'm looking forward to finding out what happens next.
I agree with Brown Jenkin--this is a situation where you have to know your players. As you say, you would be completely changing the tone of the campaign, from heroic fantasy to something much darker and more horrific. You would also be changing a ground rule (no evil characters) that's...