I always thought games that only rewarded you for being either GOODY GOODY or TOTAL DICKHEAD and kind of left you hanging if you stayed neutral was kind of an bullshit. I usually go good guy, because that's usually canon for any possible sequels. And it makes it so that if I play the sequel shit actually makes sense.
I kill only those who actively try to kill me of any of my in game allies. And if they give up or show forgiveness I let them live.
If they insult MY character, I leave them be. If they insult/hurt my allies I'm likely to beat their face in, but not kill them.
Its funny though I've only played very little of the first game. I couldn't get into the gameplay. I'll eventually try it again though, Because I played KOTOR and loved it and I'm sure there is some good story in there.

I hope he's in Episode 3 in some form. Just like how I want Chel and GLaDOS from Portal to be in episode 3 in some form...
Hell I just want to play Episode 3...