So if you really want an interestingly evil game, what you're going to maybe want rules for, is how you break people.
I think this is a good point. In the D&D context, Intimidation is the obvious skill, but you would need some sort of mechanic for adjudicating it (dare I suggest a skill challenge!).
I'd suggest reading some old tragedies from the Greeks or Shakespeare. Get a handle on what evil is.
I'm less sure about this. People run heroic games relying on TV, movies and a bit of pulp. Can't they do the same for an "evil" game?
Torturing a paladin until he is corrupted. I am not sure why any supplement would have such precise rules. What about how many good deeds turn a kobold good? Do we need this sort of stuff?.
Huh? Of course we do! I mean, we have rules for how many times we have to whack a paladin with a morning star before he's dead, so we can replicate
that part of Morgoth's war against the free peoples. Why can't we replicate his torture of Hurin too? It's just a version of social conflict resolution.
evil is banal.
<sip>
It's what you do when you buy a D&D book instead of donating to a charity.
This is highly contentious. Not even Peter Singer or Thomas Pogge asserts this, though both think that there are deep moral issues involved in making that sort of consumer spending decision.
Part of Rai Gaita's attack on Singer in "Good and Evil: An Absolute Conception" takes (more or less) the following form: Singer equates failing to save (eg via donation) with deliberate killing; deliberate killing is evil; therefore Singer is saying that failure to donate is evil; therefore Singer is crazy. But, at least as a superficial diagnosis of Singer, this criticism misfires when it imports into Singer's framework a notion that he does not himself use, namely, "evil". (I'm more sympathetic to Gaita than I used to be as an undergraduate, but I still think his criticism of Singer misfires at a deep level also - but that is a bit off-topic.)
I think the modernist theorists like Neitzsche, Durkheim, Weber etc raise genuine doubts about whether the category of "evil" even has purchase in the sort of context which gives rise to choices like "do I give this money to charity, or use it on a trivial luxury purchase." Notions of structure, agency, power, and (perhaps) justice seem more appropriate for trying to understand what is going on in such situations.
And I don't think they make for very good D&D - which is (like pulp and comic books) essentially romantic, even reactionary, in its core moral outlook. If you read Tolkien and wonder "How come the hobbits have such a high material standard of living given that they seem to have the producitve capacity of thirteenth-century England?" you've missed his point. If you read the X-Men and wonder why Storm is not using her powers to avert famines the world over, you've missed Claremont's point. And if you play D&D and worry about why the PCs don't spend their money on poverty relief rather than magic items, I feel you've missed the game's point - or, rather, are trying to take it into territory where it will probably break down. (Maybe try My Life With Master instead!)