So yeah, felt bad doing it, but was still able to protect my reputation as a paladin by sparing the civilians and only attacking the hostiles. And come to think of it... there was that one guy who was robbing the bank. I didn't feel too bad about killing him.
I thought he was "robbing" the bank of items that were his 5 minutes earlier. The quest doesn't say that though so I guess it was just my head cannon.
Also, if you want to feel good about the purge don't do the horde version. From that POV the purgers seem like even bigger jerks. Most of the BE civilians have no idea what is going on and don't seem to want to fight. They are just confused and afraid.
I have made my opinion of the two different purges. I made a post some time ago, but it looks like the thread was erased because I can't find it in my earlier posts...
Anyway, here's what I think of why there are two different Dalaran events:
The Alliance players want to be the good guys. They want to do the right thing above all else. But at the same time, they don't want to be stupid in their goodness. They want their actions to be taken seriously, and they want to fight back against the Horde's agression instead of rolling over. What they get is a scenario where the Blood elves are on the attack. As soon as you get there, they jump Jaina and try to ambush her. They are armed by the Horde. They are in full insurrection mode. At the same time, you see civilians running around scared !@#$less. Not only you're not asked to attack them, but Jaina teleports them unharmed to the Violet hold. You can spare the innocents, and you're expected to while various attackers jump out and attack you. The quest gives you the impression that a great part of the Sunreavers are involved in betraying the Kirin Tor, and you are dispensing justice in a righteous way.
Horde players are given an entirely different scenario. They want to fight the Alliance, but have been hit by the villain bat very hard and can only feel like villains. They are not in the right, they are pushing this war needlessly. The Dalaran scenario makes them see the Alliance and the Silver Covenant in the middle of doing horrible things to the Sunreaver innocents. Its a slaughter right now. The quest's purpose is obviously to make you feel that you have a good reason to fight the Alliance due to their treachery. You have to make them pay. Blood for blood.
Alliance players are absolutely clean in their actions. Horde players are completely justified in their anger. Its a win for all players.
Mostly Allies since they get the Kirin Tor and the Silver Covenant as allies.