As far as the expressed question goes, "How good can evil be?" is a rather annoying question.
First, it depends entirely on just how evil the actor in question is. If the actor is an ordinary but slightly selfish human being with a bit of a destructive and cruel streak, then the answer is probably that that person can under the right conditions be very good indeed. After all, there are few people so depraved that they do not mean to do good for thier friends and family. If on the other hand you are talking about an outsider that embodies an evil principal, then the answer to the question is "Not even the tiniest bit". There is absolutely no 'grayness' areas with an outsider that by embodies evil, because if there was even the tiniest bit of good or nuetrality in the outsider then by definition it wouldn't be an outsider that embodied evil but rather something else.
So, look at it this way. How evil can a Paladin be? That's precisely how good evil can be.
Now, I've been down this road before and the first thing someone is going to say is that evil can do good if its beneficial for itself. No, because that would imply that evil is somehow enherently better than good and that the universe was somehow slanted in favor of evil. If something is actually evil then its evil even when it isn't in its own benefit to be evil, but rather because it just can't help itself from being evil any more than a Paladin can help himself from being good. If something is actually evil then it considers evil superior to good all the time and in every situation. If something is actually evil then it believes in evil as a matter of faith, and practices evil as a matter of reflex.
Part of the problem is that people seem to have this idea that you can only stay neutral by being basically good and just a wee bit evil. No, if you are neutral, you can just go out and murder someone. You just have to rationalize that in this particular situation you were justified in doing it and not make a habit of it. Nuetrality is the alignment of people who believe in doing good when the situation calls for it and evil when the situation calls for it. The 'extremists' believe that thier philosophy is superior all the time, and that even if it seems hard to follow thier principals sometimes that they ought to do it anyway. And the reward of that behavior is that once you believe strongly in something, you know longer believe in everything and are protected and defended against being presuaded to act contrary to your beliefs.