I just looked over the Allegiance system again, and it actually looks like it would work pretty well...
You see, they list several different examples of areas in which you can have allegiance; Person/Group, Organization, Nation, Belief System, Ethical Philosophy (law/chaos), and Moral Philosophy (evil/good).
So, for example, if you used this system in D&D, you could have a paladin of Tyr with allegiance to Good, Tyr (a belief system or person, depending on the campaign world), Law, the church of Tyr (an organization), the High King (a person), and his adventuring group (a group; duh), in that order.
So, under allegiances, he'd write down "Good, Tyr, Law, Church, The King, and (insert party name here)", meaning that he would act however he felt was best, but in general, he would work put the greater good before his god, his god before the law, the law before his king, and his king before his friends.
Conversely, another paladin of the same god might have "Tyr, the King, my Nation, Law, and Good", meaning that he put his god before the king, the king before the nation, the nation before the law, and the law before the greater good.
Both would be paladins, but both would have different outlooks.
So, basically, you still have 'alignments', but not straightjackets, and a concrete way to know whether your elven ranger would fight alongside his fellow elves against invading orcs, or help stop a nearby dam from collapsing and inundating a local village. This way, you could have "detect law" detect anybody with an allegiance to law, and unholy weapons hurt people with allegiance to good.