@ Archmagister Nelacayne: Its not just this one paticular incident that puts me against the Empire. They've gone way down hill since then, but the fact that they had no qualm in just killing anyone they thought might be an assosiate (note they don't just execute all those stromcloak prisoners you encounter all across Skyrim, why would now be any different?) and that none of the other soldiers bothered to try and stop the execution other than 'but hes not on the list, oh do it anyway? yes mam' doesn't indure to them either from an RP perspective. Tullius being there and just letting it be anyway only shows to me that the upper command doesn't care who they kil. Its a world of 'ifs' and we don't know what was going through that captins head exactly, but from my characters point of view, it was pretty corrupt and heartless to just kill them all.
I guess it's general war mentality at play here. People become ruthless. The end-war situation doesn't necessarily bring out the best of a people, more like make them act as brutal as they ever will. Ulfric getting away due to Alduin incident should've only made Imperials even more bitter, then. I wouldn't be surprised if they just then had started some more irrational executions around Skyrim just for revenge. But they did not as far as I know. This was a special case because they had Ulfric.
It's hard to judge a people's state of mind when they live in a crisis... I've never really been in one and that I'm grateful. I'm just guessing from what I know about psyche, news from the world, and having been a year in the (lazy) army.

Also, about this army mentality... You don't question your officer's poor orders, especially at spots like this. If you opposed, you might've been archered like that horse thief. You just fulfill the orders. Also, a senior officer to that officer tends not to change the orders the latter gave, just evaluate him/her based on it. Tullius might've either chuckled and lol'd in his mind for the lady Captain's bad leadership, disapproved but kept his mouth shut nonetheless, or even approved. Him not interfering anyway was very credible, I think.
I still hang on to my theory that the high-ranking soldiers had agreed to kill everyone involved (so Hadvar didn't know and got a bit upset, I think, but professionally followed orders - he certainly wasn't a high-ranked guy with his bookkeeper equipment) even if it wasn't most Imperiarily done.

Just this once. To cut the loose ends. What if PC was a Stormcloak too? They couldn't take the risk.
I'm not saying they all can't be pure evil. They can. I just speculate the Captain might've been the only one. And the general war-mentality / bloodlust / survival instict / whatever and the pressure stemming from the importance of the situation itself might've affected her (and others') reasoning, and a lot at that. But, the Septims have been gone for long, so their values might've twisted at some point in general.
Of course, from the character's point of view, it's corrupt and heartless! There's nothing else in your mind than "an evil lot who try to execute you"! I posted earlier in a very similar topic about whether any of my characters could ever join the Empire after what they almost did to them. They'd have a hard time, that's for sure, but one can do it. He's an Imperial bardish guy and I'm doing the Empire quests with him. He's reasoned his way out of the near decapitation by knowing the Imperial ways and just blaming the situation and the Captain. But were it myself in real life in a situation like this, of course I wouldn't trust the Empire ever again, and just thought they are animals. I'd likely fail to reason that the Captain and/or the situation might've been the only thing that was wrong there, but even if I could realize that, I'd still fear the

out of them and avoid them for the rest of my life for sure.