I prefer it in fact.
The only problem is most games make you into a cartoon villain with insane choices.

Good choice: Give them all your redundant organs and all your money.
Evil choice: put them into a school bus full of children, set it on fire and dump it into a lake of acid.

It makes sense of course, more choices means more possibilities and scripting and such.
But I would like to be more subtly evil or even Lelouch-like evil.

No matter how appealing an 'evil' choice may be to me, somehow I always end up with the goody-two-shoes approach. I guess I don't have enough mean bones in my body. ;)

First of all, thank you Licurg for making my day with those comments :-)
Second, I mostly tend to get towards the more evil path in games. I think it's much more satisfying and rewarding.. :P
I think syndicate wars says it all

In something like Dungeon Keeper or Overlord it's pretty funny but in something that hits closer to home involving gangs and organized crime I find it a bit depressing. Some of the people Carl was sent to murder in GTA San Andreas were benign people.

Probably even more uncomfortable are the Hitman titles (which I don't bother with too often).

But in games like Saints' Row The 3rd, which doesn't take itself seriously, it can be fun.

Sleeping Dogs and Yakuza 1 & 2 had me going for awhile as well because of the very well written stories and acting.

Talking about villainy, I always wanted a game where the goal is to assassinate the emperor of Japan. Or would this make the protagonist a hero?

"History is written but the victors", so this is basically a issue about beliefs, positions and perceptions - one mans terrorist is another mans freedom fighter.

So to answer your questions, it depends completely on your views of the Japanese emperor.

In a game, it would also depend alot on the view of the game makers - which angle they are taking and how they portray things. There are games out there, where Al-Qaeda is portrayed as freedom fighters battling battling oppressive american troops.

I like playing evil in games where it's not a matter of choice : GTA, Pirates, Evil Genius, Ghost Masters, etc. (Ok, listing exemples here just suddenly reminded me I had started a gogmix on that.)

In RPGs, I play nice, trying to solve everything the most ethical way. In real life, this is the actual challenge, I see evil as lazy. In games, I agree that being good sometimes makes things easier or more rewarding (in a fairytale morality sense : kiss the frog instead of squishing it and oh surprise it'll turn into a princess). But sometimes it sends you on tedious quests that could be short-circuited with an axe in the face, or prevents you to get the loot from that nice guy with his useless +4 sword that would serve you better in your quest to save/destroy the world. Well, I like when you do actually sacrifice options for ethical reasons, or else there's not really a dilemma.

Also, I can play evil in some circumstances, usually after one regular play, to see the other options. The sith path of KOTOR was hilariously disturbing at some points, and the physical changes on your character were a nice incentive too.

But yeah, most of times, I simply play it (chaotic) good. And this means, roleplaying good. For instance, I generally don't play kleptomaniacs even if, for some reason, as pointed above, it's usually expected even from the most uptight virtuous white knights in most RPGs...

What bothers me more is when the game makes me play a morally dubious role while totally glorifying it (especially games about recent/ongoing wars). One nice aspect of WH40k is that it never pretends you aren't a dickhead, whatever side you join.

Hold on there buddy, you're giving him too much credit. If you're talking about history then sure people like Stalin or Mao were victors, Hirohito on the other hand has won nothing except possibly his own life.

Now talking about the game, I was thinking about something along the lines of Inglorious Basterds in game form, a FPS/TPS with some action-adventure mechanics thrown into the mix that would tell a story of some Korean/Chinese guerrilla fighters battling Japanese troops starting from Manchuria all the way to Tokyo. I'd consider something more meta for the game's final, for instance the established goal of the game would be capturing and kidnapping the emperor, but during the final act of the game you could choose to beat the already seized emperor which without any prior indication would come to lethal effect after 3 hours of real time.

I'm also not a fan of playing bad guys. I might take the selfish reaction one or twice, but I don't make it my M.O.

Hell, I'm playing Red Faction Armageddon and I'm having trouble remembering i have to destroy stuff to get money for upgrades. I'm just not used to non-sensical destruction.

I naturally tend to play Chaotic Good. Unfortunately, most RPGs equate Chaotic to Evil. Which means playing a Paragon in Mass Effect means playing as Lawful Good only. Likewise, Renegade actions are always Chaotic. What about the Lawful Evil; using the system for self-gain?!

You mean like Dungeon Keeper bad where your so bad it's good and the guys trying to stop you come across as assholes?

According to this video (there's a forum topic too), you all should be put in jail for playing villains!

I dislike having good people die, even more so if it's because of my actions, so I frequently try to look up the consequences from choices before I have to make them. And, if possible, I make followers invincible (unless they can be revived by gameplay means, such as a priest offering resurrection spells) so I won't have to watch them die just because I asked them to help me out.

What?! I like my world black-and-white.

I would probably be a villain in reality but I always play as the good guy
Perhaps its because choices are always either
A) Help someone
B) Kill them, piss on their corpse, kill their family and eat their dog
In terms of the gap between good and evil

Playing the bad guy has always been a lot of fun for me in many games. Back when I used to play Dreamcast, PS1, Ps2,and xbox games they were a few titles that had you play from first the good side and the bad side. Even on PC games like the Command & Conquer Series, Warhammer Series, Sonic Adventure 2, Sonic & knuckles many Star Wars Games,etc let you play as the bad guy and I loved it. A few sandbox games let you play from both sides as well.

It was always a rewarding Ying/Yang experience. On the good side you get rewarded for doing good things,saving people etc. On the bad/dark side you get to run out and destroy,control,etc . I always felt being able to play from both sides of the fence brings a breath of fresh air to any game as well as introduces you to a different viewpoint. I wish more games allowed you to play like that tbh.