Mostly when I DM and even when I finally manage to play D&D, most players are usually of Good or Neutral alignment. Which is completely understandable, since we are mostly that alignment in our real lives and some players are not comfortable even roleplaying an evil character. However, for me it offers a lot of possibilities to try my wings at a type of character which I’m definitely not, it’s kind of a nice challenge for me if I get to play an Evil alignment.
I think the reason why most players don’t like to play an evil character is that they are afraid of destroying other players’ fun. And it can be true if not played well, since these characters are usually self-centered, somewhat cold and cruel, with little regard to other lives. Probably one evil character is okay in a party if he’s not Chaotic Evil with an open megalomania while the rest of the party is not Lawful Stupid.
The more players play evil characters, the more likely the game will get out of hand, that’s for sure, but it doesn’t necessarily mean that it’s impossible to have a fully evil party. Of course, the players need to compromise and build the party together to estabilish a common bond or hierarchy before even beginning the game. I think Neutral Evil and Lawful Evil could work well together as a military hierarchy or as members of a guild, where strict rules could prohibit characters turning against each other during a quest. I’m quite sure there would be arguments and threats between the party members, but the rules mostly keep them from turning against each other and start a fight to the death.
When I play an evil character I like to go for Lawful Evil, usually playing a tyrant-type of a character. He still abides by the rules (well, at least, SOME rules), and if he is the party’s leader, then he’s just a bit more strict and a bit more cold as a Lawful Neutral, which can still keep the party going with only minor conflicts (and threats). Of course, as I play I’m purposefully acting less evil to make it compatible with the adventure and the rest of the party, but still trying to get as much out of it as possible. It also helps if the setting is purposefully darker and there is a bigger room for the character to play his alignment. The usual rule is true I think, a character can only play his alignment as much as the DM allows. So this kind of play also needs an open DM with more routine in storytelling to deal with the purposefully more sinister and selfish acts of an evil character. And it needs a lot of maturity from both sides to really bring out the difference between the alignments. Probably not for those who like to run around, stealing everything, killing or raping anyone they encounter…