I don't like alignment because its an oversimplification of human (or sapient) behavior. I **DO** think that your actions should have consequences based upon the reactions of NPC's to what you do and who you are affiliated with.
In the context of a video game setting up these reactions in a realistic way is probably a lot of work, and in many cases in may be reasonable to simplify and just use alignment. The implementation in WotR could use some work, but its not terrible. They could avoid the problem GM4Him outlined if they put law-chaos and good-evil on completely separate axis rather than on a 2D coordinate plane.
In any case, setting up dilema's that impact your alignment is fine if you don't want to take the time to model interactions more accurately (which probably is not worth it in most games anyway).
I don't like using alignment as a simple label that allows you to decide who you are allowed to kill on site. I know there are some who disagree on this point. Lets just agree to disagree and leave it at that.
