First off, a sword that only destroys evil doesn't mean insta-kill. It just means you only deal a fatal blow if they're evil. You can just rule that it still damages good characters, so you lose basically all of your allies due to constant wounding.

Second, this is consequentialism vs deontologism. Is the morality of an act decided by the outcome or the act itself? You have the consequentialism view that the action is okay because you know it can only kill an evil person. I argue that the sword's properties can change without you knowing, so this knowledge is just belief. As the consequences cannot be truly known before the action takes place, the morality is decided by the action itself (deontology). Stabbing people at the start of every conversation is evil.