Creeeeepy. The intro is very well done.
The phantasmal killers might be too strong. Is it missing a per-day limit, or can they really be used at will until anyone whom the Child has mind-read succumbs?
Some might dispute your alignment reasoning, since I've seen many people describe selfishness as Evil or Evil as selfish. But I'm in agreement with you: altruism is Good, malice is Evil, unconcern for others (= selfishness) is Neutral. Just wanted to put that in at the outset.