Tiaral

It would be nice to cite the Order of the Knights as an example of "not an army of fanatics."

But I didn't just cite any order; read about the Knights Hospitaller and what their idea was.

The idea was to cover themselves with a peace-loving ideology, though.

Well, that's the way it is. If you ruin your reputation, all the surrounding countries will get angry, and that's it; it will be like your mercenary state in the previous game.
It's better to focus on completing morally sound tasks.