After that other thread, I think it is more like the setting can handle evils of any kind, but the moment them or characters of any other alignment become outlaws, the limitations of the module design become too evident and can cause further conflicts and frustrations in the community.
Perhaps what FRC needs to do, is change the executions or crimes that lead to becoming an outlaw for meaningful time in jail. The more serious the crime, the more time a character has to stay in prison. Make it months, and in the extreme cases
years.If a player has no desire to roleplay every day in prison, then they can roll a new character while the time in prison is served.
Perhaps Cormyr could build a large prison like Neverwinter had in the single player campaigns of NWN and the criminals could be left there to RP among themselves. Prison break events could be also planned to give convicts a chance to flee (though they would of course become outlaws if they escape).
Sure, executions can and should still happen, but more to that in a moment...
It may seem harsh for the players of those characters to be imprisoned that long, but when certain bad apples (now banned) mass murderers were around for the infamous 2017 PvP frenzy that the server experienced, it all was so bad because these characters could not be stopped by any means. Someone would finally defeat them in PvP? They respawned. They were executed? LOL... their buddies would claim the remains and resurrect them. It was madness, chaos and honestly, it made no sense. It all only lead to grudges and competitive play for the -wrong- reasons.
Now, considerable time in jail, even if perhaps it is not canon for a true version of Cormyr, should maybe be the new standard rather than going straight to the gallows or to be beheaded.
Not only would this IC penalty be more respected than the executions as how they are now, but it would give a sense of closure for all parties involved. The guilty characters would be away and nobody would be trying to settle the score either. Endless PvP circles would become slower and characters would not become outlaws as fast (Right now I think the counter is like 2-3 executions, but maybe I'm wrong).
As for executions, make them
Permadeath, but save them for the most extreme cases, where it is clear that the criminal (of any alignment and class) has to die. Make them scary, make them sad, make them gritty and make them as definitive as they should be.
In turn, players of characters suffering that fate, and that can roll with the punches OOC, should in turn be congratulated and treated with the respect they deserve. Maybe also offer them a boon in form of a unique magic item, or an RP perk (like nobility or a knightly title) for their next character they would like to play.
Any more ideas here are welcome