lol! You didn't let that ogre try and fool you into believing that it was a wingless elf did you? It surely deserved death for trying to pull such an obvious trick.
My understanding regarding fallen Paladins and Rangers is that it affects the PC, not your NPC party members (happy to be corrected, but I'm fairly confident that's the case). The
Ease of Use mod includes a component; "NPCs Won't Fight Each Other, Leave" which will keep Valygar in an evil-oriented group with a low reputation. It's not particularly good role-play, but it's your game, so do as you please.
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On low reputation prices, the
Ease of Use mod now has the "Low Reputation Store Discount" component that will give you an 'intimidation factor' in addition to a 'popularity factor' - so the further away from 'average' your reputation gets, the lower the prices.
Please note that while I've highlighted two components of Ease of Use, I'm not advocating installing all of its components, as some i.m.h.o. are game unbalancing (while others I find quite handy).