Like everyone else, villains will be considered to be Heroes of Light both by Moogles and NPCs. Moogles won't monitor them and will treat them the same than they would anyone else. Obviously, if they go killing people left and right while everyone is watching and gloat about it on Mognet, Moogles and NPCs can get suspicious. But otherwise, they can function as villain.

Also, they may happen to get a particularly devious Moogle assigned to them, they are rare but morally ambiguous Moogles do exist — Moogle's personality is left up to the player.