People turn to video games and fiction for a variety of reasons, but most often it is to do things they cannot, to experience things they cannot. The wild, imaginative excesses are entertaining and frightening, something a cubicle or something of that nature isn't.
LeninCat wants to unleash his rather sadist tendencies by opening up a concentration camp in Tropico. Does it make him immoral? Probably. Does it make him a serial killer or something of the like? Doubtful. There is still a considerable boundary between thought and action, between temptation and fulfillment, though video games do blur it.
Keep this in mind: is it not just one of the prolifera of madness that people have proposed for Tropico? Some people wanted Tropico to be a giant narcotic plantation. Some people want to enable public beatings, torture sessions or executions. Others wanted to do some other horrid deed. The proposal isn't too far out of place with some of these in that it is crazy. Tropico certainly doesn't seem to lack the crazy following.
Crazy is not inherently good or bad, rather, it enables the furthest in both directions.
Frankly, what it comes down to is that being able to commit a genocide in Tropico would get some bad publicity for the publisher, which could harm sales and possibly (worst case scenario) eternally damn the island Tropico. I'd prefer that not happen. If I wanted to play a game that took pride in its own infamy, I'd play GTA.
LeninCat, I guess you'll just have to be content with gunning down preggos.