Exactly. In D&D it is possible to empirically determine whether specific actions will shift your alignment towards evil, because there are spells to detect evil. For paladins there is an easy way to determine if singing and dancing is evil: use your detect evil power before and after someone dances or sings. If you don't get an evil reading then that behavior wasn't evil.
To have a group of paladins set up a tyrannical state that tries to force people to be good is impossible. Trying to do so would cause the paladins to fall. This is because, somewhat paradoxically, lawful good behavior requires allowing free will (it falls under "respect for the dignity of sentient beings"). Lawful neutrals can talk about the evils of free will, but lawful goods must allow it, or they will find they are no longer good.
Edit: Lawful Good behavior also requires not causing suffering to innocents. If you are the enforcer for a tyrannical government that causes the innocent to suffer you can't also be a paladin.