There's some stuff in the Book of Exalted Deeds about using Diplomacy over time to change an Evil character to Good by showing them the error of their ways. There's even a 1st level spell in there that gives them a look at heaven and they get a penalty on the save or skill check or whatever to resist the good-ifying.
We did this with a Kobold we caught. I don't rightly remember WHY, beyond the fact that our group seems to collect NPCs. We used the direct method on our kobold (who is the group's proctor in Greyhawk city now) and an indirect method of not killing a random-encounter Orc and telling him to shape up ... then sticking a magical mark on him that will disappear when he becomes Good.
--fje