Personally I dont think we have the technology to be able to provide an authentic experiance of morality in games.
1) Games need an 'exact' action that is categoried 'good' or 'evil.
If you have shades of grey is makes it alot more difficult to program those sort of actions and therefore most developers take the easy option.
Also games can't read your mind and know that your doing something for the greater good (or evil) and needs to reflect based on your current actions.
2) Players want instant gratification
If you had a game where you were evil for a whole bunch of missions you would want to see that evil played out? But what happens if you were being evil (or good) in order to do something greater good (or evil)?
For example, in Fallout 3 you nuke the village. Now its seen as evil because you've killed alot of people; but what if YOU see it as good because its saving them from a lifetime of pain and misery in the wastes..
If you had the game give the reward too late it makes the game appear slow. Too early and too easy the game seems shallow.
3) Games need to have a much larger scope to cope.
If in a game you were a well known murderer (in say Oblivion); you can't go within 10 feet of anyone without being chased away by guards (or killing them

)
But by doing that you've also deprived yourself of all that game content that towns / cities provide; access to shops, equipment, quests and everything else which is no longer available to you because of your 'choice'.
Now alot of people would say "Tough - you made that decision", but alot of other whiny players will say "Its ruined the game, I can't buy / sell anything anymore etc etc".
This means that the devs will then have to write content to cope with ALL of your choices (ie, assassins guilds, thieves guilds etc) that are happy with your life choices - but even then the amount of content is greatly slimmed down and would be seen as a game restriction.
4) The game shouldn't allow for a 'bad' decision
Basically any sort of consequence within the game because of a player choice will need to be balanced before its accused of being biased to one play style or another.
Its similar to this 'compainion' system in TOR; they say you can annoy your other half so much that they leave. Great if you want to play a lone wolf, but at the same time you have HALVED your combat output because of this, which players will complain about as being imbalance towards their choice.
If the game got too hard, or too easy because of a decision made then people would complain.
What this really means is that NONE of the choices are espeically good or bad; they cancel out any benifit because of the required balance.
5) Games are NOT real life
At a very basic level people play games to escape real life, if anything to disconnect from the human race for a while.
When they are given the chance to slaugher the orphange or save them the only real consequence is the way the game reflects your choice. It can't be 'bad' or make the game harder as ive stated above, and also players wont feel any emotional changes (like guilt) because they know deep down its a game, its all fiction and the people in the game suffer no pain or guilt themselves - because they dont exist.
6) No real world consequence
MMO's people are happy to Ninja loot, grief, gank and all sorts of actions towards their 'fellow man' because of the 'invisiable wall' between them and their subject.
Its this wall that prevents them from feeling any sort of guilt because the player is invisible - and the person (victim) at the other end of the screen can't come around their house, knock on their door and punch their teeth in.
The same thing happens with driving; you will see alot of people being very aggressive on the road, swearing the pushing into traffic etc - simply because they know the chances of them meeting the person they have pushed into is stupidly small. Where as if they bumped into someone in the supermarket they would probably apologise, because they are personally exposed to any sort of repercussions (ie, being punched!)
So in short morality in games is nothing short than just another gameplay gimmic saying "You can either be the good guy or the bad guy" because REAL morality would require actual human interaction, and consequence that would extend further than most games are willing to go because it would destory the popularity of the game, and the real reason the game is made: TO MAKE MONEY!!