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That sounds like a delightfully awkward character to play.  Reminds me of my Level 14 Wizard (on another server) who REALLY wanted to be a knight.  Without any fighter or other than wizard levels he took armor proficiency heavy, weapon proficiency martial, and shield proficiency.  He refused to accept his role as a wizard (even though I leveled him as such)!

I suppose, but I play a LE character who hasn't done anything particularly evil.  She's not a psychopath or sociopath.  She has no interest in murder, thievery, etc.  She's more interested in the systematic oppression and use of those without the inner fortitude to control themselves and make a place in society.  She'd gladly enslave half of the colonists and give them some direction rather than let them live out their pitiful lives accomplishing nothing...  but since she's new, she's poor, and she's currently rather weak there is no point publicly announcing any of this.  

Clever schemes don't require me to wear a scarlet-letter style branding of my alignment through IC actions...

Being evil IMO requires specific conditions that are hardly met by any lvl 2 character (we should remember that we all start as such, lvl 2 means little to no experience aside of learning your basic profession). To be evil for me it would mean:
- Actively and consequently committing evil acts FROM THE START and not when you’ll gain some levels and decide that “ok, now it’s fairly safe to be a badass evil character”. If you do not act evil that means that you are neutral and you’d best ask for alignment shift. (meaning, you try to gut someone for money AT LVL 2, you try to sacrifice someone in religious ritual AT LVL 2, etc.)

I very much disagree.  If you view the world as having evil and good as legitimate forces (as in PnP) that are concrete concepts, not abstractions, then it doesn't always matter how you act.  Evil does NOT mean stupid.  If I'm a newly recruited mercenary of some sort (fighter) who used to be abused by the town guard and beaten up by local ruffians as well, that doesn't mean I immediately go and try to kill them.  If I'm a cleric who is supposed to make living sacrifice to a god, do I do it in the middle of the Ziggurat when I've just been initiated into the church?  Absolutely not.  If we played evil the way you suggested it, we'd all be dead within days of creating our characters.

Evil is about personality, not actions.  You can be evil and not commit evil (though if you NEVER do anything evil, it becomes questionable).

My point wasn't to ignore the DE ability, but I don't think most reasonable intelligent beings would spend their free time using a supernatural ability to check out every person they encounter.  If someone is acting in a socially acceptable way what reason would a Paladin have to use the ability?

My favorite part of the rules is that a Paladin can not KNOWINGLY quest with evil characters...  but Detect Evil is an active, not passive, ability.  So, both IC and OOC, if a Paladin wants to be friends with more people he can simply choose not to activate the ability.  That way, unless his party members / friends commit evil acts in front of him (who would DO that?), he can be friends with EVERYONE!  Yay!

I think an important point, regarding Paladins, is that Detect Evil is not supposed to show you exactly who/what is evil without several rounds of concentration (18 seconds).  Presumably this form of concentration would be visible to anyone paying attention (an intent stare with a hint of magic to it - maybe only with spellcraft checks, then?).  If an evil character sees a Paladin focusing and perhaps beginning to localize auras with their ability they would most likely high tail it out of there before the Paladin could identify them fully.  More importantly, most Paladins should have a strict enough moral code to not then risk falsely accusing the wrong individual in the event they could not absolutely identify the source of an evil aura.

Regarding the actual debate regarding the nature of Evil in D&D...

I'd be careful pushing the "your character is evil, so you are awful" argument too far.  Chaotic good characters can do bad things, at times, in pursuit of a good end - even in the long term.  Similarly, a lawful evil character may not commit one single evil act while on the Archipelago because their overall nature that defines them as evil does not dictate that they act in an evil fashion in a new place.

Evil does not mean stupid.  An evil character could be ruthless, unconcerned with others, and manipulative but if she is never put in a situation where that matters then there would be no reason to suspect her of being evil.  My hypothetical evil character, if forced to flee the city, may be willing to leave a friend for dead, silently kill two guards on the way out, and rob a caravan to get money to pay for passage out of the area - but if she is never forced to flee she could live peacefully with others without problems.  Being evil does NOT mean being committed to doing evil - it can sometimes mean an intentional willingness to do evil if it makes sense...  but evil characters can perform neutral acts just like good characters can.

EDIT: I will admit, it is much harder to justify a CE character who never commits an evil act than it is a LE or NE character.