Presumably, actual mutants are unlikely, with most "evil" people actually just holding mistaken (about their actual preference) moral beliefs. If the sword is an external moral authority, it's harder to see why one would consult it.
On the other hand, sword checks soundness of the plan against some preference, which is an important step that is absent if one doesn't consult the sword, which can justify accepting a somewhat mismatched preference if that allows to use the test.
This passes the choice of mismatching preferences to a different situation. If the sword tests person's preference, then protagonist's choice is between lack of progress or unlikely good outcome and (if Vhazhar's plan is sound) verified installation of Vhazhar's preference, with the latter presumably close to others' preference, thus being a moderately good option. If the sword tests some kind of standard preference, this standard preference is presumably also close to Vhazhar's preference, thus Vhazhar faces a choice between trying to install his own preference through unverified process, which can go through all kinds of failure modes, and using the sword to test the reliability of his plan.
The fact that Vhazhar is willing to use the sword to test the soundness of his plan, when the failed test means his death, shows that he prefers leaving the rest of the world be to incorrectly changing it. This is a strong signal that should've been part of the information given to protagonist for making the decision.
..fragments of a book that would never be written...
* * *
Captain Selena, late of the pirate ship Nemesis, quietly extended the very tip of her blade around the corner, staring at the tiny reflection on the metal. At once, but still silently, she pulled back the sword; and with her other hand made a complex gesture.
The translation spell told Hirou that the handsigns meant: "Orcs. Seven."
Dolf looked at Hirou. "My Prince," the wizard signed, "do not waste yourself against mundane opponents. Do not draw the Sword of Good as yet. Leave these to Selena."
Hirou's mouth was very dry. He didn't know if the translation spell could understand the difference between wanting to talk and wanting to make gestures; and so Hirou simply nodded.
Not for the first time, the thought occurred to Hirou that if he'd actually known he was going to be transported into a magical universe, informed he was the long-lost heir to the Throne of Bronze, handed the legendary Sword of Good, and told to fight evil, he would have spent less time reading fantasy novels. Joined the army, maybe. Taken fencing lessons, at least. If there was one thing that didn't prepare you for fantasy real life, it was sitting at home reading fantasy fiction.
Dolf and Selena were looking at Hirou, as if waiting for something more.
Oh. That's right. I'm the prince.
Hirou raised a finger and pointed it around the corner, trying to indicate that they should go ahead -
With a sudden burst of motion Selena plunged around the corner, Dolf following hard on her heels, and Hirou, startled and hardly thinking, moving after.
(This story ended up too long for a single LW post, so I put it on yudkowsky.net.
Do read the rest of the story there, before continuing to the Acknowledgments below.)
Acknowledgments:
I had the idea for this story during a conversation with Nick Bostrom and Robin Hanson about an awful little facet of human nature I call "suspension of moral disbelief". The archetypal case in my mind will always be the Passover Seder, watching my parents and family and sometimes friends reciting the Ten Plagues that God is supposed to have visited on Egypt. You take drops from the wine glass - or grape juice in my case - and drip them onto the plate, to symbolize your sadness at God slaughtering the first-born male children of the Egyptians. So the Seder actually points out the awfulness, and yet no one says: "This is wrong; God should not have done that to innocent families in retaliation for the actions of an unelected Pharaoh." I forget when I first realized how horrible that was - the real horror being not the Plagues, of course, since they never happened; the real horror is watching your family not notice that they're swearing allegiance to an evil God in a happy wholesome family Cthulhu-worshiping ceremony. Arbitrarily hideous evils can be wholly concealed by a social atmosphere in which no one is expected to point them out and it would seem awkward and out-of-place to do so.
In writing it's even simpler - the author gets to create the whole social universe, and the readers are immersed in the hero's own internal perspective. And so anything the heroes do, which no character notices as wrong, won't be noticed by the readers as unheroic. Genocide, mind-rape, eternal torture, anything.
Explicit inspiration was taken from this XKCD (warning: spoilers for The Princess Bride), this Boat Crime, and this Monty Python, not to mention that essay by David Brin and the entire Goblins webcomic. This Looking For Group helped inspire the story's title, and everything else flowed downhill from there.