I very much get rather deeply involved with games when I play, and one quirk I've discovered is that I am very, very protective of friendly NPCs. When you either have civilians standing around or troops fighting alongside, I find myself genuinely saddened whenever I lose them, even to the point of killing myself, and retrying to keep them alive.
The first time I ever played Halo, it was co-op with my best friend. Common enough story, I believe. However, one thing sticks out beyond just the fact it's an awesome game.
When we landed on the ring, we got to the first lifepod spot, cleared the initial Covenant... And then my friend proceeded to mow down every last survivor to their yells, scooping up their ammo. Why? Because it was quicker, and we moved on.
I was traumatized. Then the Warthog came down and I soon got better.
However, when you are in the mindset of a hero attempting to protect others, it comes as a poignant loss whenever you fail to do so. Whenever they can die, painfully, and you can kill them and them move on, that still has an impact to me, hollow characters or not. Where 'friendly fire is not tolerated' and it punishes you even for mistakes, it's simply annoying, and empty.
This example has a point. When you, the player, are free to act, but the consequences are displayed inside the game, that has power. When the game itself talks to you, that is both arbitrary and distracting.
Morality meters are a phenomenally bad idea, on multiple levels. The most obvious, of course, is that you're, mechanically, largely restricted to being either 'far good' or 'far evil/ruthless', a simple binary choice, often with independent benefits. Then there's the metagame of 'I want points in A, so I'll do X,' which completely disconnects the player from the game. However, there's one worse.
Where there is a morality meter, there is only reward with going 'all the way' to one end of the spectrum. Which means the character is going to be 'selfless savior of all that lives' or 'destroyer of worlds and one who laughs at absurdity before blowing it all up' which leaves to mindsets to occupy. Both of which do happen to be interesting characters to be roleplaying, as the player. However, anything more complex, a character with contradictions and instabilities, is completely shunned. All grays disappear.
And of course, grays and rationalizations happen to be the realm of humanity. The binary choice between being Good and being Evil is, quite frankly, boring. The reasons why something applies, having reasons against, attempting to weigh between varying (including more than just two) viewpoints, each with valid reasons on every side, that is interesting. And realistic. And that draws people in and gets them thinking, and even conflicted. Something that's Good or Bad just 'because I say it is' is as hollow as a grave.
Morality systems happen to devolve things to 'press A for Good, press B for Bad.' Which is very, very unsatisfying, because player action, interactivity, is then negated.
Where actions are left to the player, where the person with the controller must actually accomplish something, which gives the player ownership over their actions, which makes moral dilemmas considerably more potent.
Deus Ex does accomplish this remarkably well, as people have already stated. Going through the opening mission, I first attempted sneaking through undetected. As I went through, I found myself facing a position where it was simply much more expedient to take people down. So I did. And then it became easier. At the end of the mission, the agent I talked to noted that I "killed a lot of people out there."
I quit the game.
Where consequences come back in the game, whether your actions influence an invisible reputation that alters how others treat you, or whether what choices you make alter the world in a noticeable way, then gaming turns toward art. The morality system has been and always will be the sausage-fisted blunt force way of handling it, because as tempting as it is to have player tendencies tracked and presented to them for their information, it will always devolve, because something as complex as human motivations simply cannot be represented as a gauge.
It has been done better in some instances. For one, Mass Effect's system works quite well, as its tracking of the usage of both dialogue approaches allows for a more complex characterization depending on the situation, even if the metagame still had me tending towards certain corners. It's a habit I have to actively try to break.
inFamous, for all its faults in this regard, did rely on using the player's actions influence Karma for the majority of the time, leaving the decision to the execution. Having to stick with the decision, questions running in your head as you act, makes it mean more.
Dragon Age 2 didn't have a scale, while having a very similar system to Mass Effect, and only lightly tracked approach tendency. However, it did intensely track what individual choices and had practically every little choice you made come back to you in some manner, which lent it a phenomenal sense of greater consequence. The lack of metagame scale meant I was freed, compared to Mass Effect, by simply allowing a rather complex character to form and play as that. Not to mention that the entire game revolves around one great big, beautifully gray moral conundrum or another. That ability to roleplay was the reason why, despite all its obvious faults, I couldn't pull myself away from the game.
And that's about all I've got to say about that.
(Until, of course, I read someone else's comment and simply must continue.)