One of the ways I've seen alignment-free D&D done is that only creatures of extremes show up as good/evil/chaotic/lawful. Thus, the average guy in the street doesn't show any alignment but a paladin or a fiend would show up as good or evil, respectively.
I like that. So you have to do something to deserve your alignment. A Good character works hard to keep up that alignment, and an Evil character does heinous things to earn that alignment.
Unless everyone's been lying to me and the next bunch of episodes are The Great Divide II, The Great Divide III, Return to the Great Divide, and Bride of the Great Divide, in which case I hate you all and I'm never touching Avatar again.