No.
I don't mind a player of a paladin acting wrongly (by their own lights). But I want them to take it seriuosly, and I (as GM) would set up situations in which they have to take it seriously.
But that's perhaps an indicator of the more general sort of game I run.
If I had a player who wasn't interested in the game I was running, I woudn't faff around with codes and alignment to try and make them play seriously. I'd just boot them out!
Or to put it a slightly different way - I don't want a player playing his/her PC any less seriously just because s/he's not playing a paladin!
By a story consequence, I mean something like "All your friends now shun you, and your steed shies away when you try to approach it." The player can choose to have his/her PC live with those consequences, or not - and maybe if s/he doesn't want to some sort of quest is in order. But I want it to be for the player to make the choice.
That it shifts the planar balance can't be the explanation for it being Evil, can it? - because it is only because it is Evil that it would shift the planar balance. Some other account of the evil of torture therefore seems to be needed.
Likewise for Celestia, the Abyss etc. The reason we can tell that they are paragons of good, evil and the like is only because we already have a conception of good and evil.
(This is the cause of my dislike of mechanical alignment. I don't particularly care to have to apply moral labels to my friends' PCs' behaviour as part of my GMing duties. I might have my own opinions, but I'd rather keep them to myself.)
My players, at least, don't play to listen to my morality lectures!
I also think the idea of mollycoddlng is misplaced. Many years ago now, a paladin PC in the game I was GMing killed his first person at 5th level (if that seems high, the system we were using involved crit rolls - so up until then this PC had never actually got a killing crit against another human - but this time he rolled really high and lopped off his enemy's head). Feeling remorseful, he went out into the wilderness to pray.
I rolled on my random encounter chart to see what turned up, and low and behold it was a (low level) demon. The demon comes up to the praying paladin, and starts taunting him - "You've betrayed your values, you've failed in your vows", that sort of thing. Now, I was expecting the player to reason in the following way: this is a demon; and nothing a demon says can be true; therefore I'm not a failure or a traitor; therefore I can kill it and go back to the rest of the group. But instead the player interpreted the demon as having been sent by the PC's god as a punishment. And so as the demon started wailing on the paladin, the PC took no actions in defence. He simply endured his penance.
Eventually, after beating the paladin into uncosnciousness the demon got bored, and realised there was no one here it could corrupt. So it went off. And the rest of the group went out looking for the paladin, found him and revived him.
That's just an example of the sort of paladin play that I think is hard, if not impossible, to achieve if the play of the class is anchored to the GM's interpretation of alignment and code issues. And I don't think that that particular player was being "mollycoddled".
I see what you're saying, but there are indeed plenty of "paladins" being played by immature or just simply greedy players out there, trust me, and the DM needs a way to not have to give them IRL morality lessons. They control the gods, and should be able to turn off the faucet of divine magic to their followers (as well as perform miracles unbidden, OTOH) who displease them. It's very much a 4e mentality that "Oh nooooes, you're not the boss of me. I want my shiny holy avenger while still hoarding the magic items and never once risking my own neck to save others like I'm supposed to". I'm talking of the "Cavalier" build, I mean, the default paladin.
4e takes away way too much power from the DM, IMO, and reduces the gods into being merely divine magic reservoirs, to be drained by any and all followers like pigs at a trough. Removing any penalties for bad game choices only reduces the out of combat portion of the game to be "fluff". I don't want that. I want there to be real worries about PCs losing their powers and spells if they chose to access magic from a divine power source. As I said, on the other hand, if they perform exceedingly well, the DM can reward them with boons that go above and beyond their normal class progression. If a paladin descends into hell and gives up all his worldly possessions, even sacrifices himself to save the weak, why shouldn't he return as the White Knight with a Deus Ex Machina at DM discretion? If you take away penalties that the gods can give, you also take away boons. Because if you only allow boons from deities, that's a munchkin game, meaning your PCs can indeed do whatever they want and get away with it. Bah. As I said before, you haven't encountered munchkin paladins, so consider yourself lucky.
I want D&D gods to have real power, not have the rules shackle DMs with "no, you can't take away their toys because they'll cry" limitations. Earlier editions with morality clauses baked into only one class only made it so PCs who didn't think they could actually play that way would lose it, given they play at a table where DMs aren't just there to hand out goodies and never say no to their players. It sets a tone that says : magic is real, the gods are real, and in the control of the DM, and if your magic source is divine, then the DM should have the right to place restrictions on its use. The gods are not blocks of stupid mana goo up in the sky, they are sentient and have their own morality, foibles, goals, and agendas. Why shouldn't they pick and chose who they will favor based on their actions?
I'm an atheist too, which is precisely why I want my D&D deities to have real power and not just be "absentee landlords" who just cash your rent check, turn the heating on in winter, and fix the plumbing while you're at work. I want them to have an active role. Don't you?
Saying they can't have the power to alter something on their followers' character sheets, for good or ill, is really hampering your toolkit as a DM. PCs who don't like that should just play those who aren't explicitly worshippers of those gods. It's a give and take, not a take and take. The PCs have to live up to their end of the bargain, especially Paladins but Clerics too. You trade off the ability to do whatever occurs to your on a whim, change your alignment, steal, whatever, to gain powers that most envy or want but are not worthy to get.
This is a good way to do the Apprentice levels for those classes, you gotta "earn" your divine favor and boons, earn the god's approval. Sort of like a pre-atonement to join the fan club. It should have RP criteria baked into the class. Again, if the PCs aren't willing to do what's required of that order to join their ranks, they can just play a fighter or something else. Only the few should make it. Not everyone IRL can become a cop or a fireman, you need not only certain stats but also a certain character. If humans are selective about hiring people, why shouldn't D&D gods be?