But the thing is, assuming your point is correct, she would test Jhin, and he would pass. Not because of his inner good or evil, but because he is following his purpose: killing people.
And that's what we see happen in her own story. She is given a freaking terrifying psychopath. A mass murdering torturer, who has held onto power in his city with an iron fist. Everywhere he goes he brings death and destruction. He is damn evil, he makes a great villain.
He passes the test. He is free to go on to be just as evil and vile as he was before. So, from a moral standpoint, the results of the test are neither good nor evil. It's just change.
So with the results being a wash we instead look at the implementations of the test. This is where it fails. Because that supermarket employee who could be a great writer? It's ultimately his choice to be a supermarket employee or not. That's on him. That's his life. Now if he chose to undergo the trial to unlock the conviction to go on to be a great writer. That's something, else. That's him taking the initiative of his life. Good on him.
But that's not how Illaoi works. She forces people to undergo this test. And if that supermarket employee, who has done nothing morally wrong, should fail this test. He dies. The world doesn't gain this great writer, in fact the world is strictly at a loss because after all we do actually need supermarket employees. That's where it's evil.
Now, what Nagakaborous is doing, is saying, according to him, good and evil the concepts do not matter. All that matters is motion. Motion can be positive or negative in outcomes, but that's not in itself good or evil. In the same way a hurricane is the motion of current and wind, and while it can be destructive, it can also bring much needed rain. The hurricane is not good or evil, because it's mindless.
But, if Nagakaborous is not mindless. If Illaoi's actions are all based on the actual will of Nagakaborous, then we, as thinking, feeling, individuals can judge him/her/it/they. We judge him by the standards of our own life, on the precepts of what is good or evil. Now, of course, there are arguments over what constitutes good and evil. Because we are, all of us, individuals with our own opinions.
But, I would look at the methods by which the test is administered, and you can tell me if you think this is in any way moral.
-The test is given without the participants permission or desire.
-The test is potentially fatal.
-Those that die do not do so because of any grand moral failing, on the contrary mass murderers can pass to go on their merry way mass murdering. It only judges whether you are "in motion" or not.
-What is or is not "in motion" is vague and poorly defined.
Those conditions are inexcusable, from a good/evil moral standpoint. Which makes sense. The test is not about good and evil, it is about motion. But just because something is not about good and evil, does not mean it cannot be judged as good or evil.
Since he's already brought up. Jhin. Jhin, much like Illaoi, is dedicated to what he views as his purpose. His purpose is not to promote motion, it is to create art out of dead people. According to Jhin, this is an acceptable thing to do, maybe because he sees his art as beneficial to society. Maybe because he sees his art as a rejection of conventional morality. Maybe he hasn't actually thought of it in any way. Regardless, in his mind people dying for art is his purpose.
So, because this view of life and death and what a person is worth is not tied to the good/evil dichotomy, does this mean we cannot judge him by his methods?
I would say no. We most certainly can. He is a mass-murdering sociopath, whether he thinks his art is more important than the lives of those he kills is irrelevant. He's still killing them.
And whether Illaoi thinks the lives of those who die by the Trial were worthless or not, it doesn't matter. She's still killing them. (Or more precisely, setting them up to die)