Ask Game Masters

I think the key is to use it as one aspect of the world, not the entirety.

It sucks, but humans in the real world are very prone to xenophobia against other humans, and it can be about some pretty dumb characteristics. But not everyone does it. Any time you might have a despot enforcing their prejudice, there's a resistance to it in some part of the population.

Now, it is perfectly fine to just not have it be in your game. Ttrpg play is largely escapist, so you can just leave things out. You can even forego the usual dwarf/elf antithesis if you want.

The second part follows the first. You either use that kind of tactic as part of your world to make it realistic, or you keep it escapist and use only the more broad "evil" of the bbeg being power hungry. I don't think you can use terror tactics like zersetzung in a morally ambiguous way at all though. It's an act that is inherently harmful to people and society; the exact situation you're using to describe it is proof of that. You'll never be able to use those tactics and not be considered bad later on, so a bbeg using them is definitely unambiguous.

Props for talking to your players about what they're comfortable with.

I play with a bunch of middle aged white dudes. We haven't experienced problematic discrimination, so we're comfortable including it in my campaigns. I wouldn't if I had a player from a group who has suffered discrimination at our table.

I thought about using aspects of the 'Zersetzung' ('disruption'/'decomposition') in a game as part of the BBEG's tactics.

According to Wikipedia, that involved framing dissidents (or potential dissidents) with crimes that "were non-political, such as drug possession, trafficking, theft, financial fraud, and rape."

I think that would be acceptable at my table, and it would fit with my style of campaign.

If used, should discrimination/terror always serve to emphasize someone's evil nature, or could it sometimes be 'rightfully' presented as morally ambiguous as well?

I've made characters racist (between D&D races) for comedy value, or to indicate that they're jerks of some sort of Not Very Smart. Generally my BBEG won't be, because they're too pragmatic.

I personally prefer to avoid these things in my media, but some people, including those actively affected by these things in real life, actively want these things in their games for the catharsis factor of overcoming it.

I like settings where the players can play parties from all kinds of factions. I've seen 'em roll up members of the same cult their last party faught against etc. This isn't a complete answer but just one more li'l contribution to the thought palette around this.