'm pretty sure causing huge amounts of pain to no purpose other than you having a piece of jewelry isn't showing much concern for the dignity of anything, and is kind of more in the hurting and oppressing end of things.
You're also assuming that werewolves can actually feel the pain, or if it causes any pain in the first.
Considering in D&D werewolves can only be injured by magical or silvered weapons.
So, that could indicate a high resistance to pain.
Or if not then maybe you could anesthetize the creature to eliminate the pain.
Either way, if causing the creature pain is all that makes the act evil, then if you don't cause the creature pain it isn't evil.