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Age of Empires and games derived from it make killing civilians a sound tactical move. Then again, most of the games are set before the Geneva Conventions and most civilians can take up weapons and attack the enemy anyway...
Age of Empires III added a physics engine, which is best put to use by training a force of 5 Falconet cannons, sending them to attack a single enemy villager, and watching him scream and fly about 7 feet straight up in the air before landing headfirst on the ground.
Dungeon Keeper 2 gives the player access to prisons, torture chambers, traps, fight pits, a temple where you can sacrifice your minions, and rigged casinos. So many possibilities...
Capture a group of heroes and convert all but one of them. Feed your converts, heal them, and train them while giving the odd one out only the barest amount of food and healing to survive the prison. Then drop the unconverted one into a pit and put his former friends on the sidelines to cheer as he's beaten to a pulp over and over.
Capture a hero. Drop him in the torture chamber and keep him barely alive until he gives some information. Reward him by dropping him in the fight pit with your meanest monster before returning him to prison and letting him starve to death, becoming a skeleton.
Line the walls of your hero lair with torture devices, so the heroes that serve you live surrounded by screams as you torture their former allies.
Take the monsters you don't want and lock them a sealed room without food, money, or beds. Wait until they get angry and revolt and burn them down with lightning. Have your imps send them to prison and let them rot into skeletons or vampire fodder. Or simply beat them into unconsciousness or death.
When Payday comes around, grab every minion in your domain and drop them in the Casino. Switch it to rigged and let the money roll in. Once you've got back some and the monsters begin to show displeasure, switch it back to normal and put the monsters back to work.
A monster displeases you? Stick it somewhere surrounded by lava so it can't reach the exit portal and wait for it to turn on you. Send your creatures to beat it up, then torture it into serving you. Repeat.
The PC and Amiga game Syndicate, where evil corporations use squads of cyborg hitmen to duke it out in bloody campaigns of espionage and terrorism, and where plenty of innocent civilians would end up getting caught in the crossfire even if you weren't aiming for them on purpose (and let's be honest, you probably were. Maybe you even have brought the flamethrower for that reason.) And if that wasn't cruel enough, you could even use mind-control devices to round up herds of civilians and use them as meatshields.
Why use them as mere meat-shields, when you could arm them all with miniguns, or - god forbid - gauss guns. (Of course, if you wanted to be really cruel to your mindless minions, you could lead them on to a train track or other soon-to-be fatal area.)
Is it a subversion that the persuadertron (the Mind-Control Device) would let you take over and own the enemy agents without firing a shot, provided you first took over a large enough number of civilians?
That one is probably closer to Mercy Rewarded, as the persuaded agents get a permanent spot on your team if there's a vacancy.
The local source of resources is Green Rocks that horribly mutate anyone who stands in it unprotected. It's perfectly possible to simply fill the streets with the stuff, making it impossible for the civilians to get out without dying, all to increase your profit margin.
In the first person shooter Command & Conquer: Renegade, you are actually encouraged by the tutorial to squish people while in a Tank. "Now you can practice Squishing!"
Feeling bored? Try marching your troops across a Tiberium field for shits and giggles, which is surprisingly a viable tactic. If your enemy's base is close to a tiberium field, letting enough infantry die in the field and morph into visceroids causes them to eventually merge into very dangerous large visceroids, which will soon start attacking the base. It's probably not as efficient as just attacking with the infantry units in the first place, but it's so deliciously sadistic!
It is, actually. Large visceroids are **incredibly** tough, and their attacks do ludicrous amounts of damage. The only problem with them is that they don't obey commands, but if their attacks can be guaranteed by proximity, it takes a surprisingly small amount of resources to start wreaking some real havoc on the enemy base. Sadism rewarded!
Many maps in the games feature large urban areas with buildings your troops can garrison. You can also choose to reduce the city to a ruined wasteland with your weapons. This is actually a rather viable tactic, as it prevents the enemy from garrisonning those buildings. Some of these buildings will even "drop" a Money / Powerup Crate when destroyed, giving you more incentive to wreck them.
Command & Conquer: Red Alert: The Playstation version has a cheat that turns the ore into civilians. They just stand there as the harvester scoops them up, and you hear their dying screams.
Yuri's faction has a structure called the Grinder, which reprocesses units for their materials. You're meant to do this with captured enemy troops, but you can also mind control innocent civilians and send them to what sounds like a horrible and grisly death. This is actually a good way to get some cash.
The Iraqi Desolator can deploy to irradiate a massive area. Any infantry (except Desolators) caught in the area will quickly die from radiation poisoning. And the same goes for any civilians...
In Company of Heroes, not only can you run over infantry with tanks, but Sherman tanks can be upgraded with mine flails, a collection of weights attached via chains to a spinning motor. Their primary purpose is to destroy mines, but there's no reason why you can't use it on infantry.
The Allied forces have access to demolition charges, while the Wehrmacht can build bunkers, including medic bunkers, where their troops can huddle for safety. There's nothing preventing you from blowing up a first aid station with garrisoned troops.
Countless Critters of several Warcraft games have met their bloody end at the hands of various troops.
Crusader Kings has this in spades, though some of it is governed by Random Events. You can assassinate little children to inherit titles, kill your wife for a new one if she doesn't provide you a proper heir, burn churches, revoke titles from your vassals for no reason at all, ruthlessly pillage enemy lands with your troops, force heathens to convert at swordpoint, and even steal relics.
The Game of Thrones mod allows one to play as Joffrey. After crushing the Stark rebellion, the player is free to imprison the surviving Stark family members and blind/castrate/execute them.
Mech Commander allows your mechs to target and destroy civilian objects such as houses and cars (although you get no bonus for doing so—apparently civilian casualties are of no importance in the 31st century), and has the "lordbunny" cheat, which allows for infinite artillery strikes. While this has the obvious potential use of decimating enemy forces, it also can be used to annihilate huge numbers of civilian targets without wasting your mechs' ammo. You can call in dozens of artillery strikes to raze entire cities to the ground and, once all civilian buildings have been flattened, set the forests on fire, probably condemning Bambi to certain doom in the process.
In both Pikmin games, you can have control over put to 100 cute little vegetable minions whom you can do anything you want with, including throw all of them over cliffsides, feed them to bigger creatures, and my personal favorite, taking all my non-blue Pikmin and drowning them in a nearby body of water.
In Stronghold Crusader, you can set enemy buildings on fire (provided they aren't made of stone). Even better, the fire spreads, potentially turning the entire castle into a raging inferno. Aside from the cathartic potential, this is also an effective tactic, as it pretty much obliterates their economy and prevents them from replacing their troops. Of course, you may want to make sure the fire spreads, by taking out the water pots or killing the firemen...
In Star Wars: Empire at War, if the Rebellion captures Coruscant and the player is the Empire, the player can use the Death Star to blow up Coruscant, killing the planet's population of over a trillion.
The various methods you finally deal with the Super Agents themselves count:
The P.A.T.R.I.O.T Agent, Ramboexpy Dirk Masters: you dunk him into a tank of chemicals that have been engineered to react violently with the steroids in his body, transforming him into a Freak. Not only is he stripped of his humanity, but he has to serve your every whim, and there is nothing he can do about it.
The A.N.V.I.L Super Agent Jet Chan: you drug his food with sedatives, and then arrange a "fair" sparring match with a minion. In the resulting match, he is so utterly and humiliatingly beaten that he retires from the agency and flees civilized society with his name and reputation in tatters, and spends the rest of his life in seclusion, meditating bitterly over his defeat.
The S.M.A.S.H Super Agent Mariana Mamba: giving her reverse-liposuction treatment and making her hideously obese. Without her primary asset - her splendid looks - she is forced to retire as an agent.
The way you deal with the H.A.M.M.E.R agent Katarina Frostanova, arguably the most cruel of all of them: you take her childhood teddy bear, the only thing she has ever shown affection for, and you order a minion to beat it up, chop it, and tear it into pieces. Right in front of her. Her resulting mental breakdown is so catastrophic that it renders her completely unfit for active duty.You Bastard.