I think there’s a little room for debate on what “full-on evil” means. That is to say, I think that of course, Regina’s actions were evil and fueled by revenge when she killed the villagers. Her behavior as monarch are cruel and unjust and completely centered on killing Snow, despite the fact that there is no reason to believe that her people will love her after. However, just because she is acting in an evil way during the events of the episode does not mean at that time that she is irredeemable. When Snow begins talking about the idea of reconciliation, Regina legitimately responds with interest. She entertains the idea that they could be a part of a family again (and she doesn’t flinch at the idea of being the one who needs forgiveness) and you can tell she is hoping to reveal herself to Snow so they can have a fresh start.
It’s strange, at this point she seems to have practically forgotten about the dozens of villagers she put to death. Why? Because that was a “crime of passion” if you will. It was her response to being disappointed and frustrated and angry that she wasn’t receiving the help that she wanted. It is of course evil, but evil in a different sense than the later Regina we see.
Rumplestiltskin’s plan wasn’t to make Regina more evil than she already was (that was covered during the events with Dr. Frankenstein) but to temper her, create someone who could start to see the “big picture” as it were. Regina’s actions until this point were very quick, reactionary, and short-sighted. “I’ll kill Snow, then the peasants will love me and… it will be great. Yeah. Then I’ll be happy.” The Regina after the events of this episode is not a fiery, passionate being who acts out of impulse, she is calm, cold, and calculating. This is exactly the kind of person who would be willing to cast a curse with such horrific implications- because they’re looking at how they’ll benefit in the long run.
"Nothing is easier than to denounce the evildoer; nothing is more difficult than to understand him."
