@sum1lost: Well "evil" is just a placeholder for the bad guys right now, and is probably too loaded a term. Anyway, the rough story if you re-read the original post is that the Forces of Darkness (tm) are screwing everything with their dark magic that is unleashing horrors and messing up space-time, etc. which is bad for the other pretender gods. Therefore, the Forces of Light (tm) have banded together to put a stop to this, so yes, it would be unthematic for them to send horrors to enemy provinces since it would further mess up space-time, etc.
However, it's perfect okay for them to chop up the Forces of Darkness (tm) into little bits or burn them or whatever since this fulfills the greater goal of getting rid of the bad guys. So maybe it's an uneasy alliance for the good guys as well, or maybe everyone lives happily ever after if the Forces of Darkness (tm) are defeated. I'll admit it's not Tolkien, but hey at least it is a story-line.
@Foodstamp and Hoplosternum:Originally I thought about limiting the magical diversity of Darkness because they're already so powerful with Astral, Blood and Death. However, Abysia's Fire and Blood theme does work pretty well with the whole satanic, hell-fire, devil-summoning theme. So maybe a combination of limiting pretender magic paths and nation choices will provide and simple and enforceable solution. If Light happens to find indie Amazon who will "convert" and help out by casting Dust to Dust, then so much the better.
So here's a lineup of possible Villians:
Abysia: Hellfire and Blood!
Ermor: Undead Legions
R'yleh: Mind enslavers and void gate openers.
And Heros:
Pythium
Caelum
Arcoscephale
Ulm
Man
Mictlan, MA
Actually, I'm finding it more difficult to come up with reasons why the good guys are really good. I think it is partly just the way the game is designed that no one is really "good" and all nations want to come out on top. But of course we can try to use nations which fit our general sense of goodness and order, as long as pretender choices like the Prince of Death are avoided for the good guys.
Another idea: Maybe a grudge match between Kailasa and Lanka. However it might need a bit of handicapping. Likewise with Pythium and Ermor.
"Astral could be used by both, but have a list of prohibated spells for the good guys - no Enslaves, Soul Slay (& therefore Mind Hunt), Soul Drain, Unravelling, Doom, Horror Mark, Abominations etc." Yes, I agree with this for thematic reasons if the bad guys are responsible for all the horrors.
Note, Darkness and Light could be changed to Chaos and Order. Chaos and the whole horror summoning, ruining the world theme works well together, but figuring out who is order will be harder. Of course, Light is also a rather murky concept.
Finally, I want to emphasize this isn't a finished idea by any means. I think what would be ideal would be an epic Lord of the Rings style war, but of course, we'd probably need some more mod nations.