Can't argue with logic like that. Waste 3 rounds (18 seconds) to make sure I'm not killing a coerced, non-evil being <snip> or brighten my day now with the crisp, clean sound of bones breaking?
I reiterate- unless the Paladin is Detecting Evil on every opponent he faces to determine whether he is not coerced or non-evil, he's acting the same as he did when he executed this halfling- judging him to be evil by his ACTIONS- here, aiding & abetting a night-time home invasion.
If he IS doing so...then he's spending 3 rounds of every combat DE-ing, while his adventuring fellows are under attack.
Gross violation of the Code: How about the part about respecting "legitimate authority?" He was apparently living in a large city, with its own set of laws, and he took justice into his own hands (most likely in a fit of rage).
and
Committing an Evil act: Snapping the neck of a neutralized captive (esp. in a case where you're already in a large city that supposedly has its own code of crime and punishment). If that's not across the line, it's at least tightrope-walking along it.
and
The paladin's action was almost certainly in contravention of the local laws, so the first definition checks.
"Legitimate authority" would most likely allow a homeowner to kill someone engaged in or aiding someone commit a violent felony within that homeowner's abode, especially at night, especially accounting for a society in which "legitimate authority" response times would typically be measured in hours rather than minutes.
Once again, killing a neutralized captive who committed a crime in a jurisdiction and time period in which the death penalty was probably allowable by law for that offense.
AND, as I pointed out, a homeowner's killing of those involved in a night-time invasion of his home was something that was permissible by most secular and religious laws of the time period this game is patterned after- even if they were fleeing or neutralized.