I am currently running a local group through Pathfinder's Reign of Winter adventure path. In the most recent session, the PCs (who are mostly good-aligned) ended up taking two prisoners at the end of a big combat, as they do when their opponents surrender. Both of these NPCs who surrendered were listed as Neutral Evil in alignment, but neither one had a reason to fight to the death when the battle was already lost.
One of the NPCs was a human female soldier, a commanding officer, but not philosophically committed to evil. Just naturally selfish and maybe more violent than most. The other was a supernatural fey creature who was evil by nature, corrupted by dark witchcraft. In both cases, the PCs entered into negotiations with them, and were very reasonable. They even let the sergeant leave with her "loot" from her bedroom, rather than taking it.
As a result, the PCs got some quality information, especially from the supernaturally evil fey, because she wasn't bought in to any particular cause, and was thankful for not being killed with cold iron. In both cases, though, they were kind of moved by the mercy shown, and in the case of the sergeant, I imagine her heading home with her possessions and life intact and really thinking about her life, maybe even making another decision. (In fact, she's likely to come back later as a character working toward reformation).
The point I'm getting at with this little gaming story is that, given how alignment leads to so much misunderstanding and internet flame-wars (and memes, as above) it's good to be flexible and responsive. It's even good to reward "good" behavior in reasonable ways. Just because it says "NE" or even "LE" or "CE" on a character sheet doesn't mean the person in question is always doing evil things, or will die in order to do evil, or will refuse to surrender, or is always lying and selfish.
Not only that, but these little moments of mercy are the kinds of moments that actually do change people for the better, sometimes, in the same way that one horribly cruel and painful event can change someone for the worse (again, arguably, see above). If nothing else, it gives "good" PCs in a D&D-style game to be something other than cookie-cutter moralists or, more often, just people who ignore alignment almost all of the time. Even if their mercy is not returned, or if they are taken advantage of, it just pushes them to another important choice - how do they respond?