Good and evil are normally very separate and distinct things in Disney films. There are few moral grey areas, and generally the good guys are easily recognized as being good, and the bad guys are recognized as being bad. Even in films where roles are reversed, such as "Beauty and the Beast", wherein the handsome man Gaston is evil, and the horrible monster of the Beast is good-hearted and tender, the audience quite quickly can identify them into their respective roles, based purely on their attitudes and the way in which we are presented with them. In "Lilo and Stitch" however, a viewer cannot easily distinguish the alignment of the characters, and they quite often change sides entirely. While this is not an uncommon theme in modern films, "Lilo and Stitch" manages it in many cases without affecting any significant change in the characters under consideration.
This radical and frequent altering of the roles of protagonist and antagonist is not generally caused by changes in personality. Rather, the writers accomplish the task by constantly altering your personal definition of what good and evil are. This occurs on both ends of the scale.
Goodness, in varied amounts throughout the movie, is defined in several different ways. First, it is presented to us as having the ability to be reasoned with, and being able to belong in society. When Stitch is unable to demonstrate this quality he is exiled. Later, under the shaded eyes of social worker Cobra Bubbles it is defined as being able to maintain a job and a nurturing environment, as well as being able to be a "model citizen". This view is related to the original definition presented by the Grand Council Woman, but takes in the specifics of employment and behaviour. Lilo then further narrows this definition by attributing being a "model citizen" to Elvis, thereby beginning a sequence of scenes in the film in which dance, musical ability, and romance are the pinnacles of goodness. This is the turning point of good, having been taken in definition to the point of being nearly absurd. It relates well with reality however, with a popular culture that defines success as fame, carrying implied goodness with it. With this specific evolution of goodness Disney appears to me making a somewhat hypocritical comment on the reality of American pop culture, especially as Stitch rampages out of his Elvis guise revealing the evil hidden behind the ideal.
Ultimately this view of goodness is torn down and thrown aside as the movie progresses. Goodness is re-characterized as the willingness and ability to break rules in order to protect others. Jumba wilfully releases Stitch in order to rescue Lilo, marking his own major switch from one alignment to the other. This change in his perceived role is consistent with his rebellious personality, and reveals that, according to this film, goodness has less to do with behaviour and more to do with the goals which one takes action towards.
Evil too, is radically altered in its definition through the course of the film. The first villain presented is Jumba, who is self-admittedly "an evil genius". His evil is presented as his disrespect for natural laws, in his creation of Stitch, and his disrespect for the laws of society, in his intended purpose for Stitch as a monster. Stitch is our second example of evil. He represents a complete inability to fit in with the established culture, and a total lack of reason. Together Jumba and Stitch serve as indicators that evil is, by definition, anything which falls outside of what the governing society wants or expects.
Throughout the movie the definition of evil is further explored. Stitch is considered evil in his destructive tendencies, and for the fact that he does not actually look like a dog, as he is pretending to be. Lilo similarly does not fit in, having personality traits which lead her to be considered "weird" by her peers, and occasionally resulting in violent out-lashing. Neither Stitch nor Lilo is concerned with obedience, and this tends to cause trouble to their respective caregivers, Lilo herself and Nani. The film continues to maintain the concept that to be "evil" is to be anti-social and ungovernable.
Responsibility also becomes a major part of the way in which evil is viewed. Nani is considered a bad parent because of her difficulties handling the responsibility of Lilo. The loss of her job, in the eyes of Cobra Bubbles, makes her completely unfit to be a caregiver. Jumba and Pleakley encounter a similar viewpoint when they are informed by the Grand Council Woman that they should consider themselves "fired and prison bound", entirely the result of their "unspeakable" incompetence. Here an inability to handle responsibility is tantamount to blatant criminal activity. Evil therefore becomes further clarified as not only the inability to fit in with society, but also the inability to serve society as it requires.
Evil, like good, undergoes a rapid shift near the end of the movie. In the midst of total disaster in the lives of most of the main characters, Captain Gantuu appears to capture Stitch and return him to police custody. This event takes the established view of evil and turns it on its ear. Gantuu is aggressive to the point of being sadistic, including Lilo in his capture with no care for her welfare. His actions, driven purely by his own ego and hatred for Stitch, are petty and cruel. However, when looked at from the point of view of the established idea of goodness, Gantuu is the pinnacle of perfection. He is there in service of the society which employs him, in an effort to capture a being which deviates from the norm, and is successful in that endeavour (to a certain degree). Gantuu is doing what he is supposed to do; but this is quickly redefined as evil, because his actions are indirectly affecting Lilo, who is primarily an innocent, and directly affecting Stitch, whom the audience by now has developed sympathy for. Evil is now the force that is preventing the freedom of the main characters, and ignoring the possibility for compassion. This is further solidifies at the end of the film when the Grand Council Woman and Cobra Bubbles bend the rules of their society in order to show compassion for Lilo and Stitch and punish Gantuu, showing that the authorities now see evil where once was good, and good where there once was evil. Stitch is well behaved at the end, but his inherent energy and mischievousness remains (as evidenced in his odd behaviour during the end credits scene), and there is no visible change in Lilo or any other character. They all remain basically the same, and the moral compass spins around them.