Last I remember reading on these forums is that monks aren't allowed to be neutral because their equipment selection would be ENORMOUS! Any one who's played a monk knows that equipment makes quite a difference. Being able to select from any type of equipment available!? I believe that is the very reason they are allowed only to be good/evil.
Daemian, -Red-'s monk, was a neutral monk, and I believe he had his aura and a few other skills taken. He was no longer devoted to any one side (good/evil) so why should he be protected by it? (I'm pretty sure that was one of the reasons)