We recently had an evil character in our campaign--secretly evil, and fairly well done. Well, for a while, anyway. We were just entering the Vast Swamp (Greyhawk) when we ran into him--and he seemed reasonable, although a bit suicidal. Then we finished things up there and zipped quickly back to Irongate (our druid used Teleport via plants.) And... well, it got ugly. See, there are certain behaviors that are borderline acceptable, like ruthlessly slaughtering the hordes of attacking Bullywugs. There are other behaviors that aren't acceptable, like using some sort of mental power to kill dwarves because "they aren't going to help us" in the middle of a major dwarven city.
At the time it happened, he was out with the druid talking to these folks. The druid kind of stared at him in shock, then transformed into an animal to avoid untimely questioning by the guards. The evil guy then dimension doored out as the guard (and a lynch mob) approached, and made his way back to the inn after altering his appearance.
At which point, the rest of us found out what had happened. Well, a little before, actually. As soon as he walked through the door, my lawful good halfling monk attempted to trip him so she could pointedly ask him questions while holding him down. (Note: Kids, don't try this at home. Halflings are just no good at tripping.) The chaotic good mystic theurge immediately left the room and headed downstairs (to call the guard, as it turns out.) I told Gronk (our I-don't-know-his-alignment-but-I'm-pretty-sure-it's-good) half-orc monk to "hold him" and went down to talk with the mystic. Shortly, the guards showed up, and it turns out that Gronk had let the guy go. (Gronk is... not too bright. He's very friendly, though. Children run up and give him things. It's quite heartwarming. They don't even scream too much when he smiles.)
In any case, to make a long story short, he committed murder, and we told the local equivalent of the Men In Black who did it, and they took him down. It turns out he was an agent for the Scarlet Brotherhood who had been turned without realizing it. (He had been reporting back to the dwarves of Irongate for some time, after they infiltrated his command structure.) They were sad to lose such a valuable resource, but he was just too much of a loose cannon to have running around.
The druid's player was somewhat taken aback by the whole thing, and needed reassurance that "Yes, acting like a SANE PERSON is a prefectly reasonable thing to expect. No matter how much you want to support your comrades in arms, it's perfectly fine not to back them up when they turn out to be a homicidal maniac."
So--I'd say that we accept evil, but it has to be done *well*. And, of course, it's just hard to be evil when you've got party members who are seriously devoted to good. My monk won't lose her class abilities for being evil, but she's just gone through her own bout of temptation and redemption and ended up taking a Vow of Poverty. I haven't quite figured out how to play this new commitment to good, but I think that it would make character interaction... difficult if we were to pick up another evil comrade.
That all said--I think playing the moral and ethical alignments at all is quite hard. I've been mentioning the d20 Modern allegiance system to the other players a lot recently, because I think it provides a more sane model of character motivation--most people just *aren't* that devoted to good or to evil or to law or to chaos. It makes a lot more sense, say, for a character to have an allegiance to "Irongate" or to "The Scarlet Brotherhood" unless they've intentionally made a firm commitment to something greater. Only then should they even register on the alignment scale.
I think this is better than the other alternative for worlds with murky alignment, in which most people just don't have a very *strong* alignment, and therefore you can't really go around smiting people just because they're evil. If a person does evil thoughtlessly, it's still evil, but it's part of the natural order of human life. It shouldn't really register on the "alignment radar". If a being has evil as part of its essence (evil undead, outsiders) or has made a sincere commitment to evil (cleric of an evil deity, or any person who has made a strong commitment to choosing evil *over* good when there's a choice), that's different.
And another entertaining thought is this, from a game I was DMing for a while set in Eberron: in Eberron, it's quite possible to have a corrupt cleric of a good deity (evil character, good deity), or even vice-versa (for a good cleric of an evil deity, I imagine something like a generally evil good of the dead, or of the sea, or of another force routinely interpreted as malevolent. That cleric could be committed to gaining the favor of the evil deity to protect a village--this would be perfectly reasonable for a good fishing community in a world with an evil sea deity.) Anyway, I decided that the rules "detect evil" has for auras of clerics and other people should be interpreted specially. A good cleric of an evil deity would have an evil aura based on their cleric level (they have a connection to an evil deity), but at the same time an aura of good based on their character level (which all normal people have.) In this model, *no* creature that has a choice in its alignment has a very powerful aura of alignment--but a connection to some other force may provide such an aura.
Ramble ramble. All done rambling. Bye.