Aku is generally treated as a threat in the narrative's grander scope, despite a proportionally small handful of goofy moments. That he was kept off for so long over being made of evil, specifically, is stupid. Does pure water not count as water because it can't be anything else? Any sapient creature has automatic "moral agency" per definition. Magnifico's point is more that someone so controversial most viewers don't even interpret him as a villain, should not be haphazardly slapped with a pure evil beyond redemption label.