I've read that the original inspiration for the ethical decisions was drawn from the way old news is dredged up long after the fact by people who were uninvolved or unaffected. I think this is a great idea - particularly that if you're prudent, you'll give people a reason to hate you eventually.
What I'd like to see is this implemented fully ingame. There is already a baffling amount of text the races can throw at you, from spotting your plans to race-relationship specific stuff (ie Yor are robots, everyone makes fun of that). I think it'd add a new dimension to trade and ethics if every now and then your past ethical decisions were mentioned and used against you.
For example, if you're talking to the Humans and they hate you due to your ethics (evil), it'd be great if they could specifically say 'You desecrated those graves' or 'you use zombie soldiers, that's horrible'. Similarly, the Dregin could laugh at a good players 'weak' decisions, like weakening their soldiers training to protect trees or reducing a planets quality to protect backward hippies.
This would allow the ethical system to provide extra content, and have the player rolling their eyes at old news (are you STILL cranky about that?) or cursing their earlier decisions. I believe this is similar to the original inspiration, and it'd really tie the diplomacy and ethics together. What does everyone think?