First of all, I wasn't going to unempower him for killing a neutral mob for gear, I was giving him a stern warning. The next time he did it I would have rained down the hurtness. Why? Well, paladins are the swords of the Light, destroyers of evil, protectors of the innocent, so on, so forth. No where in there does it say "Destroy evil, and neutral if they have something that shines." What is a neutral mob guilty of? Holding equipment the paladin wants. Otherwise it is in the category of "an innocent", same as any neutral PC who has not proved themself an enemy. And to be clear, this should include neutral mobs that are aggresive, or the paladin makes attack them for some reason, which is extremely cheap in my eyes. If the mob is attacking, it's probably because you came into their home uninvited. If you came into my house invited, I would probably be pretty pissed too. That doesn't make me evil, or give you the moral right to kill me.