Welcome to Ironworks, Scott!
Yes, evil parties are possible. Your may lose some dialogue options, but that's about it. You can still complete most if not all the quests, and certainly the most important story-advancing ones. The trick is to avoid evilly killing key NPCs or NPCs in key areas (e.g. Easthaven and Kuldahar). If you're not careful, Hrothgar and/or Arundel may attack you instead of talk.
There are quite a few evil-specific magical items, and many items don't need a specific alignment to be used. Your characters will be just (or almost) as well equipped as a good party, and you will get to use some cool evil-specific weapons.
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Where there is a great deal of free speech, there is always a certain amount of foolish speech. - Winston S. Churchill
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