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I know there was some distinction in the old REG about using set-asides outside of battle, something to the effect of: your evil set-asides can only target your EC's and your good set-asides can only target your Heroes. I know you can use 2 Possessed in prep/discard to set aside your EC's, and you can't use it to set aside any of your opponent's cards in prep/discard, but I'm not 100% sure if you can set aside your own hero or not.
...but I'm not 100% sure if you can set aside your own hero or not.
I agree with all points except the very last part. I think you can't set aside your hero unless it is played in battl, which opens up all humans as potential targets.
A set-aside ability must target a card you own and control unless the set-aside card is either territory class or played in battle and gives no beneficial effect to the card set aside or the player that plays the set-aside card.
It's a rare situation that you'd even want to target your cards of another alignment since that will typically be harming them. I don't see any problems with it, only a rare strategical use. Simpler rules and added strategy are both good things.
