I just can't think of him as a villain... I think it's because for all his intelligence and his hard-earned powers he was so blind to his own transparent conceit, so needy even while strutting about in his Master Of The Universe outfit. Palace, I mean. "I pity you" was the most pitiful thing he ever said. He's always been on the outside - he's never experienced what most of the others have, and he doesn't understand just what he's doing to them by depriving them of it. I can relate to that.
He never seemed to be depicted as "evil" until well after KOTBW in Nightfall's dream - also starring Kahvi, for what it's worth... (to my great surprise... I knew she was meant to be ruthless, but not a monster...)
The thing about Rayek is that he had to maintain, for his own good, an image of himself as the big saviour. Deliberately committing genocide was not compatible with this, nor, I think, with his nature, un-saintly though it may be. The only way he could pursue his grand rescue was by relegating its horrible ramifications to the realm of the abstract, of time and space, of a "clean" never-having-existed-in-the-first-place. "It's not killing! They'll just never have been born. And I'll be preventing a lot of suffering, too!"
It's his mindset, I suppose. Other people aren't exactly foremost in his mind. Not because he hates them or anything, though he sure isn't a nice person... as a habitual outsider he's just not thinking in terms of relationships and responsibilities and loyalty as much as most elves. Still, he couldn't do it while they were watching - reminding him that they were quite real, that there was more to his plan than saving elves.
So, yes -- I suppose he's troubled - and in the end, when he got his nose rubbed in what he was about to do, he didn't actually do it...
(Kureel on the other hand had a really "low" personality. Nobody likes him or asks if he was "misunderstood"...)