Acts aren't evil....intentions are.
At least, that's how I view it. A paladin mercilessly slaying all evil creatures he detects is still Good. Heck, if they can't defend themselves in any way, if they're just helpless peasants, he's still Good. Of course, he's not very honorable anymore, so he would loose paladinhood.
Why? Because he's doing it for All the Right Reasons....to stop suffering. To end pain. Even if he causes some in the process, the end justifies the means in his mind. He's doing it to make the world a better place to live. It's Good.
It's not honorable, but it's Good.
It's the same way that a revolution can be lawful. If the revolters are organized, hoping to put in a new organization, a better organization, something that could be in control and supervise in a benevolent way, it's a Lawful act. Especially if the current ruler is Chaotic and haphazard.
I don't think Lawful means "obeying commands." It just means you like organization and have a passion for structure. Usually, this means you'll obey commands, because you love the structure that puts people in charge of you....but not always.
I'm mostly with Lost Soul....it appears that the act was motivated mostly by personal pleasure and gain. And it came at the expense of another. It leans to evil.
It doesn't have to be. If he killed him to stop him from harming others, it's good. If he killed the mage to stop him from helping others, it's probably evil (unless those he was helping were evil).
IMHO, no act can be truly evil or good. Even raising undead, though it pulls on wicked energies, can be made to be a good act, or even a neutral one, with enough rationalization.
Of course, the alignment doesn't change the perspective of the people. The wizard may not be missed by many (he was affiliated with the theives' guild, after all), but many people would view the one who killed him out of simple annoyance to be a very disturbed individual.
I've got no problems with the CN guy committing the act. No one can stay 100% true to their alignment, and there are no set number of "times" you can deviate from it before you turn evil. There's no alignment score.
Basically, you have to use it as a guideline. If the character consistently and repeatedly kills people to make himself happier, he's probably leaning in the direction of evil. Tell him that, give him a chance to try something different, or let him play evil.
I don't think it was out of character for a CN guy to kill on impulse. However, the impulse did make him derive pleasure from a malicious act....so he should be starting to feel the urge of the deep pit a bit. He doesn't have to counteract the action, but he probably shouldn't keep doing it.
Neutral isn't a balancing game. It isn't a scale. Neutral isn't the hardest alignment to play...it's the easiest. Because it's simply instinctive. You protect things that you like, you kill things you don't. You help those who are close to you, you kill people who make it harder for you to do that.
On a side note, I think that a death penalty, even, could be viewed in different ways. If it's to make yourself feel better and you derive some pleasure from seeing the victim suffer, it's probably evil. If it's to stop further evil and to send a message to halt wickedness, it's probably good. And it's most likely lawful -- anything connected to a court system would be.
Of course, that's in-game, not real-world. Everyone has to decide for themselves how their morals are balanced in the real-world, and everybody is, of course, 100% right. ^_^