So if you're using bad karma units like berserkers, how do you heal your men?

Still healers.
Small morale hit you get for your army is worth having them.
They are so good you wouldn't mind using them in demon army.

Thanks, Gremlion. I was thinking load up on necromancy spells and just run them until they die then raise them.

Necromancy decreases exp your alive units get, so avoid it whenever possible.
Experienced berserkers can get ~30 attack, so they can chop even an elephant with the help of astral energy.
Though they get too much armor eventually, so to trigger berserk you need to fireball own units :)

Care to explain?

didn't you get a link to a post with explanation about experience a day ago?

Do undead go up levels? If you're planning on keeping them, then it's not a waste when experience gets split with them. I know I've read people talking about leveling undead, but maybe they just meant summoning them at high levels because of the bonus from Summoning and Necromancy. There's no special note about undead not being able to level on the wiki.

The game is realistic in that being good is a disadvantage. The only reason to do it is that you want other people to like you. I decided this time through, I'm going to be a total goodie-goodie and not get a single negative karma point. Then I'm going to crank up the difficulty and be a total miscreant. And one of the things I definitely want to try is being a necromancer with an all-undead army.

You can leave them in the army after a battle and level them normally, but zombies slow you down, and skeletons are too fragile. On top of that high leveled undeads game creates get level ups assigned randomly, so they are pretty weak compared to cherrypicked level ups you take on alive units. Meatshields like barbarians into thugs is way better for evil person. Good units are very tanky, to the point where tier 1 swordsman can tank tier 3 troll forever. As for karma picks, being good ruler is a strong economical advantage, your provinces are densely populated and produce more gold and crystals per turn, evil person get hit by plagues pretty often.

Have you experimented with plundering your own provinces? You can trade the people's mood for money, and as long as you don't drive them to rebelling there's no appreciable difference.

1. Amount of gold plundered is based on province population. I do this only at the start of bad maps where I want to afford 3 swordsmen straight away.
2. while you plunder, your army eats wages, you don't gain experience for units (hero do gets some)/medals/artifacts from lairs/new spells/new rituals/don't unlock provinces with resources/dont unlock new lairs to clear with exploration.