green slime said:
Nice try

If the entire court, paladin and everyone else is colour blind, maybe....
Except that it's a court of "Law", not a court of "Good".
I'd say that about a third of the population (plus or minus some due to culture) will end up as detecting evil. Typiclly, good societies will not oppress the evil, as they have a respect for life and other sentient being not just other good ones. If they just went around smiting all evil, then they would be no better than those they smite (although they may try and convince themselves otherwise). Even good societies will have actions that could be evil and quite legal. LE types such as the evil landlord may operate quite well in such a society. Nobody will like them, but they will not be smited because he is obeying the laws of society and only preforming actions that neutral or even good people take but he just enjoys his work. So such tactics as detecting everybody gives no real information, nor does it give reason to act.
Want to mess with the paladin? Have a neutral person committing the actions and a prominent evil one who, although evil, wishes to see the person brougt to justice. There could even be a murder mystery where a good person perfromed the murder. Good people snap also and aren't aways willing to confess their sins.
As to whether or not it is ok for an evil NPC to disguise his alignment, it's not unheard of. Most towns have clerics who can cast such spells, and it is not unlikely they might do so, particularly if something has been done that points to evil being done. Now, doing it just because you have a PC with that ability is not good. My rule of thumb is, "Would I have given said evil person such protection even if the party couldn't detect evil?" If the answer is yes, then I go ahead and give them the protection.
Of course, if evil comes in variations of degree, those degrees are related to the actions on has actually taken, and Detect Evil can determine those degees, then at a certain point, a person could be judged to be so evil that they would have preformed something worth smiting. As I run it, deeds not words make alignment. If a person values life or hates it but never actually acts upon those feelings, then they are neutral. To be good or evil requires some actual good or evil acts. To be really good or really evil requires some really good or evil acts. It also acts the other way around and good or evil people are compeled to commit actions according to their alignment or eventually suffer alignment change. An assasin that hides out in a village as a good person, cannot commit good acts as part of his cover any more than a paladin could commit evil acts to disguise his nature. If they try, their alignments will gradually lessen head to neutral, and then conform to their actions.