Spider, you read too much into the warning given the group.
It could just have been that ("A BTW, you remember that..."), or it could have been frothing at the mouth by the DM, or, perhaps one of the other players actually thought to ASK... (Although it would seem not, given Negative Zero's description.)
It could very well be a DM desperately trying to save a BBEG... or it could be just that, a warning. I wouldn't go storming off everytime the DM warns a player about the consequences of an action...I would at least wait until after the game and discus it with the DM and other players, so there is no misunderstandings in the future.
I'll answer some of your questions,
as I see these situations applied to my campaign. Note that I'm not pretending that this is superior, merely that this is how we do things IMC, which for clarity has nothing to do with Negative Zero's.
Spider asked
1) Is it evil to kill someone who CAN defend themselves?
Yes, it could be.
Spider asked
2) Is it evil to kill someone who can only defend themselves poorly (ie, a goblin with no character levels)?
Yes, it could be.
Spider asked
3) Is it evil to let someone die after knocking them out (ie, bleed to death from -5 to -10 hp)?
Yes, it could be.
Spider asked
4) Is it more evil to use Power Word: Kill than it would be to use Hold Person and then CdG the enemy?
Are we talking execution methods? or in the heat of battle? Doesn't it vary according to who you are fighting? Wild ravenous lycanthropes, or a samurai defending his lord's honour... Not every battle is one of life and death.
Spider asked
5) Are there any forms of capital punishment in the world?
As there is Evil in the world...
Spider asked
6) What other options are available to the PC's that will reasonably ensure that the BBEG won't rape or murder anyone else?
You mean as opposed to incarceration, redemption, banishment, removal of facilities, ...
Spider stated
However, if I were in a situation were I became willing to kill someone, their level of consciousness would not change my decision...nor do I think it would change the morality or ethics of my action.
No? But would your method change your decision? What if the only method available to you caused this person an incredible amount of anxiety and pain? What if this person showed incredible remorse for his actions that led you this drastic decision? What if being unconscious prevented the person from even stating their case? Would you be so willing to take the blood of another on your suppositions of their guilt?
Yes, certain beings in the DnD multiverse are irredeemably Evil. These deserve no mercy whatsoever. However placing all BBEG in this category is less entertaining, IMHO.
I think awakening him with the party at the ready hardly counts for being able to defend one's self...
Sounds like the real mercy for a fallen foe... So much for the flower of Chivalry.