I have an Elven (Elvish for you Sean) Paladin in Living Greyhawk, and his code of conduct is Elves First!, which means he looks after any elves in the party, treating their wounds, protecting them, and so on, above the needs of the others, treating them in turn only after the elves in the party are okay. Why would a Paladin of Corellon not look after elves first?
Similiarly, Paladins of Moraddin would prefer dwarves, etc., etc. It was pretty dumb to remove the human restriction without opening the behavior up to racial preferences. What about a Paladin of Vecna? There is no rule against it in LG (There are rules about what god's the clerics can have, and they couldn't worship Vecna without being evil, so that's not allowed.) But there are no restrictions on which god a paladin can worship. A paladin of Vecna, while extreme, is not prohibited, yet is expected to act just like a Paladin of Pelor. Clearly, this is not how it would or should work out.