I think you could have a good story set against, say, a Dalek vs. Cyberman war, but the human viewer would be more interested in Doctor Who making sure neither side ended up in a position to go on to attack humanity than who won (or, if the conflict is somewhere more distant "other innocent victims" rather than "humanity").
Or you could have a story where one side might be evil but are at least fighting a greater evil ("If Hitler invaded hell I would make at least a favorable reference to the devil in the House of Commons" - Churchill).
But both sides evil, and irredeemably so, but no threat to anyone else? I think the Doctor would just leave. Having said that, I don't think he considers even the Daleks irredeemably evil.


> Then there are the virtues such as courage, loyalty, perseverance, honour and so on. If a race displays those characteristics while waging a bloodthirsty war of extermination against an enemy, can we call them evil?

I don't know about a race, but I think it's fair to call those Nazis who knew about the Holocaust and worked towards it evil, even if some of them were brave, loyal, persevering, and, in their own view, honourable.
Otherwise "evil" is meaningless.