The playstyle is stabbing random townsfolk on the off chance you kill a bad guy. Fuck that playstyle.
And for a lore reason, just have the sword be influenced by the morality of the wielder’s actions. Stabbing random townsfolk is evil. The sword turns evil.
If you know that the sword can’t hurt people that aren’t evil, then stabbing randoms is by definition not evil because you can’t hurt them.
I mean, yeah it’s meta gaming hard and lots of folks wouldn’t want this at their table, so chalk it up as a learning moment as a DM and figure out a good way to take it from them. The obvious one in this case is that the sword damages evil creatures, not destroys. Have our little meta-gaming pally stab a guy twice his level and get wrecked so he rethinks the practice. “Welp you’ve stabbed the bbeg, they’ve stripped you and the party of their possessions and locked you in a dungeon, boy you’re lucky he had somewhere to be or you’d be dead.” Like this is only a clever meta-game if you’re in a video game where you know the level of the zone you’re in and you know the full meta.
And even then, a simple “hey we’re a RP table and we try to keep meta to a minimum, so please reconsider this practice” or “hey before you go stabbing everyone, do you know what the level of each of the characters are? something to think about…” is the polite thing to do before you ruin their game based on the DM’s mistake.
First off, a sword that only destroys evil doesn’t mean insta-kill. It just means you only deal a fatal blow if they’re evil. You can just rule that it still damages good characters, so you lose basically all of your allies due to constant wounding.
Second, this is consequentialism vs deontologism. Is the morality of an act decided by the outcome or the act itself? You have the consequentialism view that the action is okay because you know it can only kill an evil person. I argue that the sword’s properties can change without you knowing, so this knowledge is just belief. As the consequences cannot be truly known before the action takes place, the morality is decided by the action itself (deontology). Stabbing people at the start of every conversation is evil.
Attacking people is still upsetting even if they don’t get hurt. There are many ways to harass people without hurting them, and I’d consider surprise schrodinger shanking one of them. I don’t know if I’d call that “evil” per se, but I’d definitely call it an asshole move.
Personally as a DM I wouldn’t make the sword evil, but I might make it so eventually it would repel the grasp of the Paladin who used it so flippantly, rather than as a warrior of good.