That's the reflection of our world: sometimes the actions you take seem moral to you, but the person who witnesses them thinks otherwise. Doesn't that happen to you in reality? And sometimes you can even accept, that these actions can be in fact interpreted in two or more ways.
Moreover, I would regard the creators of the game not as a single being that corresponds to your actions and judges if you are bad or good in general, but as a collection of different opinions on your different actions. You cannot follow your moral standards, bobthe, and be seen as good by all the members of the society. Because everyone has a different opinion (is it better to mercy-kill or not commit the murder, but let the sick person live? or take another highly discussed moral question). Try and start that debate across the world, you will see not everyone agrees with you.
Throughout the game I acted as a good character would, I tried to be forgiving, loyal, honest, sympathetic etc. Yet still I came out a mixture of everything (except cruel and aggressive) in the end. You know, I see it as a natural thing, because there are always at least two points of view on what you are doing. Not all characters in the game appreciate all the aspects of your morally good line. Some would appreciate honesty over sympathy, some can't bare honesty and will regard you as good if you tell them sweet lies but they just do not know.
Nevrose, same goes for the Mother's Plea quest. You can regard xaurips as sacrificing bloody brutes, who live to bring more chaos by worshiping and helping the drakes, so the land is better off without them. Or you can see them as another of nature's creation, although flawed but not to be blamed for they are born that way and thus do not deserve being killed (I guess, defending all sorts of beings no matter their nature that'd be the Neutral alignment in the classic DnD, not Good?).
I regard killing those xaurips at Compass as self-defense, I do not kill unless that can be helped. But they do not give me a chance to negotiate - they get killed. Period. There's killing in the fantasy worlds, because it's perilous. The moral principles are pushed forward, where survival is in question. Think of it.