Hmm... I have some thoughts here, and I feel like sharing them.
I have noticed that, in some cases, the Virtue mod and some of the arguments for what should and should not consitute a virtue hit don't truly take into account the complexities of Alignment.
Alignment has two separate factors: lawful-neutral-chaotic, and good-neutral-evil. To truly roleplay your alignment, you have to take into account not just one factor, but both factors, and the way they interact. When presented with the same options, two people of even very different alignments may take the same path.
Take, for example, the Valygar situation. With careful thought, you can easily see how each alignment might choose to handle the situation. To drive home the point, I'm going to consider the situation as if it were to happen in real life, without the restrictions of the game engine.
Lawful Good: this will depend highly upon the individual. If you believe Valygar, then the Cowled Wizards have acted in an unlawful, selfish, and patently evil manner. *They* attacked *him* first, for the purpose of personal gain, and he acted, and killed, in self-defense. Therefore, you must now consider whether your promise to the cowled wizards to retrieve must be kept. You may decide that due to the manipulations of the cowled wizards, you are no longer under any obligation to aid them. Given the very real potential threat of the planar sphere, you may then decide to aid Valygar in accomplishing *his* vow. (If you've played the Saerileth mod, she advocates this path. After all, that would be true justice.) On the other hand, you may decide that your word must be kept, and that you must bring him to the cowled wizards. You therefore subdue him, but do not kill him. Perhaps you then go to the Order and report the situation, or the magistrate, citing the unlawful actions of the Cowled Wizards.
Of course if you don't believe Valygar, then your personal convictions would not get in the way of you killing him. The way I play a lawful good person, they serve the law, insofar as it is good. Of course, it is entirely possible to play the other way around, but I've had a paladin lead a military coup d'etat, staying well within the bounds of her alignment and virtue.
Lawful Neutral: this alignment, by its description, serves the law over all. Whether this is the law of government or the obligation to carry out his or her word in all things is the major question here. You see, by law, Valygar is innocent. He killed in self-defense. Therefore, a lawful neutral person might very well let Valygar alone, or might possibly attempt to see to it that the true criminals be forced to pay the price. On the other hand, a lawful neutral person may kill Valygar and take him to the Wizards, as he did, in fact, swear to do so, and would not, technically, be breaking any laws.
Lawful Evil: You're evil. You look out for number one, so long as you can avoid trouble with the authorities. You probably don't care about Valygar's "sob story," and you're presented with a relatively easy way to make some money and get a little bit more power, as well as curry favor with a rather powerful organization (especially since they have something you're rather interested in getting). Kill him, take his body to the Wizards, get their reward. Might try to get a little more out of them with some blackmail options... maybe. Assuming you don't mind the idea of them taking violent action towards you. Could prove messy, that.
Neutral Good: What is law to you? You're neutral towards it: law is only valid so long as it is good. If the action that is right is also unlawful, then the law need not be considered. If you promised to do an evil action, then it is better to compromise your word than to commit an evil act. Better to help the man then take him to the cowls, whom you may have suspected were up to no good anyways. To kill him, when he has not truly done anything wrong... would be wrong.
True Neutral: This alignment is always hard to really figure out, especially since most people tend to lean one way or the other. The majority will have little, if any, use for the law, and probably have one of two primary motivations: what's best for me and mine, or what's best for all concerned. If you're looking out for yourself, you may decide that this whole issue is not worht the time and effort, leave Valygar in his cabin, and let the cowls alone. Or you might decide that exploring the sphere could yield some very useful and valuable things, which could only help you. There would just be a little danger along the way, and it's not like you haven't dealt with problematic situations in the past.
What's best for all concerned? Well, if what Valygar says is true, then that Sphere is a ticking time-bomb, and it's going to cause trouble for the city, and by correlation, you. The Cowls certainly can't be trusted to handle the situation properly, and they would probably make Valygar disappear once they had access. Take him along, clear out the sphere... the Cowls stick their noses in, well, that's just further proof that they would have botched it in the first place. Plus, the Cowls are a little too powerful as it is, and could stand to be knocked down a notch or three.
Neutral Evil: you, you, you. It's all about you. You have no reason to care about Valygar, or the Cowls. So maybe you just want what the Cowls have to offer, and the goods are easier to deliver when they aren't trying to run away. Or you might keep him under constant charm or dominate, so you don't have to carry the deadweight. On the other hand, that sphere is rather tempting. Who knows what kind of treasures are inside? The Cowls certainly don't have *your* best interests at heart. Kill him, take his body to the sphere, plunder it. Or maybe you don't want to have to carry the body, and it's easier to just take him along with you. He seems eager enough, and could be useful once inside. You don't really *care* about Lavok, you just want what the sphere has to offer. (Note how NE and LG could end up doing the same thing.)
Chaotic Good: You have no use for laws. You follow your own heart and conscience, and it doesn't really matter what others think so long as you are fine with it. Valygar certainly seems to have gotten the short end of the stick here, and could use some help. Maybe you don't want to help him right now, after all... the Cowls have quite a bit of power, and you do have other, more important responsibilities. But, of course, that Sphere can't be a good thing, and from the way things are looking to be, if you don't do something about it, nobody will. Might as well help the guy.
Chaotic Neutral: hmmm... depends on what the character is like. Insane, perhaps? Or maybe does things because they sound fun? You can't really say that an action is outside of character for this alignment. The Cowls did promise some very shiny things, and Valygar can't really offer the same. And he might be lying. Or maybe you're really, really curious about what's inside the sphere. Could be fun, go explore a big machine made for travel between the planes (which, you've heard, are really quite interesting). And it probably has some neato stuff inside. You may not feel quite right about killing Valygar, but you know, he does make things difficult. And you might change your mind halfway back to Athkatla, decide you want to see what the sphere is all about, and go there yourself.
Chaotic Evil: Laws are nothing to you. If they are good for anything, it's as a tool for you to use and exploit. You have no reason to fulfill any kind of promise to the Cowls, who, of course, tried to manipulate you. And Valygar did manage to kill two of them. By himself. Not bad. Might prove useful. Or he might annoy you, and you bash his skull in, then decide which is worth more to you: plundering the sphere, or whatever reward the Cowls have for you. Or you might be annoyed with the whole fiasco and decide it's not worth your time. Valygar hasn't actually insulted you yet, though it might be fun to see what his brains look like.
Of course, this is by no means a fully comprehensive analysis of all the possible reactions, motivations behind actions taken, etc. The problem when coding for virtue, of course, comes into the limitations of the Engine: it can't determine the motivations behind your Paladin killing Valygar, or betraying his word. Trying to code something resembling that into the engine would be a nightmare: you'd have to have virtue drops based on actual dialogue choices, perhaps even add a few possible dialogue for various actions. This is probably why the original game designers left alignment changes alone, save for between Shadows of Amn and Throne of Bhaal.
Of course, the whole reputation deal is intrinsically flawed as well: there's no reason why a smart, charismatic person of evil nature couldn't have a heroic reputation. He or she just managed to keep all the questionable stuff rather well hidden. A king, who makes his people love him even as he exploits them for his own gain.
Now, I'm not suggesting major changes to the Virtue mod. It's fine as it is, in my opinion, though it makes it difficult for me to play a paladin the way I'd really want to. I just noticed that there were arguments being made that made assumptions that were not strictly true. Assumptions such as paladins being unable to go against the law, ever. Where the law is flawed, even the lawful can disobey.