Everything Leareth is thinking is at the same time entirely reasonable and completely different from the way Karal is used to thinking about these things. But it's good to try thinking in different ways, and learn something new about each other in the process.
Is what he's doing checking upfront that no order would ever cross a line? No, it's not, that's obvious the moment he thinks about it. He served Kadrich, and not because he was certain Kadrich could not conceivably have ordered pointless torture or some similarly awful thing - he didn't, but Karal can imagine it, and he would have done it. He would have argued against it first, but... it feels important for some reason, that he'd do it anyway... (Is it just that he wants that badly to completely belong to someone, that he'll agree to do evil in the service because it on some level gives him what he wants? ...No, he doesn't think that's it, but it's increasingly difficult to try to pull out the loops of his instincts and inspect them in this sort of specific detail. He does think there's something there that makes sense, but what is it...)
He wouldn't serve someone who wasn't worth it, is the obvious thought that comes back to him when he asks the question of himself. And what does that mean, in words that carry some sort of logic instead of just the emotion? He wouldn't serve someone if he didn't think this would make things better. He would serve someone who might do awful things or might do great things, if he thought that by his service he would be making the awful things less and the great things more likely, and not otherwise - but having this influence, in the way in which he knows how to do it, requires the sort of commitment that will participate in the awful things, if they do still happen.
He does think many people are that way - perhaps the sort of people he's drawn to, especially. That they respond to this sort of trust and commitment - that having someone like Karal, who would do awful things on their orders, and argue against it and suffer in the doing, makes them better. But it's difficult to think through where that impression comes from. Maybe it's just that otherwise the awful things will naturally be done by people who won't argue against them? He feels that's not all of it, but he's not sure. Some of it, he thinks, is that some people will not listen the same way to the arguments of anyone who isn't fully loyal to them (he knows Leareth isn't like that - Leareth would listen to an argument from anyone, and take it seriously), but that doesn't seem all of it either. Mostly it's just that most people do, he thinks, feel safer if they have someone who is entirely loyal to them, and people who feel safe make better choices (not all of them, but many of them), and if their choices are important enough, this is worth it.
But if Leareth is not someone who will feel safer that way - and it makes sense that he isn't, Karal half-suspected it already from how he wanted Nayoki to argue with him, and that was part of what made him think it was important to have this conversation - then Karal can and will do things differently. They can come up with lines, and he can commit to not crossing them. (...That does bring up a practical concern. Given the sorts of bizarre and convoluted things that happen in Leareth's life, how sure is he that Karal will be right about whether something is crossing a line rather than just looking like it? He can ask for proof, and he knows Leareth wouldn't mind that, but what if there's no time or no way to prove something? But that's probably a conversation to have later, once they've figured out the more fundamental level of where the lines are.)
Why he thinks Leareth is worth his loyalty is an even harder question - another single bright impulse that is going to be so difficult to untangle and put in any sort of logical order. But it's increasingly clear that serving Leareth requires being able to find the logic underlying his instincts, and Karal does think the logic is there to be found.
First, Leareth is not lying to him. He is just about fully confident of it, or as confident as he can be of anything in a situation as confusing as this - perhaps he's wrong about how Empathy works or about how human minds work or about whether what he saw in Leareth's mind wasn't a hallucination, but if he worries about things like this he will never be able to make any decisions at all. But even if he hadn't had that strange Empathy-glimpse of the clarity of Leareth's mind and motivation, he would still be sure enough - not completely, and he cannot put numbers on it the way Leareth instinctively does, but much more sure than not - enough for a decision, even one as significant as this. (Holding back, when you're sure enough, also carries a price - most of the time you cannot be entirely sure of anything, or cannot be sure quickly enough for the added certainty to outweigh the lost time. And people value being seen and trusted, and will-- grow in a better direction?-- if you show them trust. Although Leareth instead values meticulous verification, Karal did notice that, he adds fondly.)
Second, what Leareth wants is fundamentally a good thing. That's... they agree on it, and it's obvious enough, once you let yourself think about it at all - the shining world of canal-Gates and cooperation and ingenuity and nobody starving. Everything Karal has seen Leareth tried to build, for its own sake instead of as a tool for that greater goal, has been good, and where it failed, they agree on what the failure was and whether it was worth it. They can read more records and be more sure, but Karal doesn't think it's at all likely that they'll find a major disagreement - and if they do find one, Leareth will welcome arguments about it, and in the end he expects one or the other of them will be convinced.
Third, yes, Leareth is doing awful things and planning worse ones in the service of his goal, but it's blindingly obvious that he doesn't want to - that if given better options he would take them, if given any scrap of hope of a better option he will spend decades investigating it. Karal wants to serve someone who will do better things if he has more resources - the entire point of being the kind of person Karal is is to be a tool for someone who will do better for having him - and he doesn't think he's ever met anyone more like that than Leareth, who has almost completely shaped himself to transform resources into good outcomes as effectively as humanly possible, and then more effectively than that.
... Did all this answer at least some of Leareth's important questions? He knows there were more of them, but there's only so much he can keep in his head at once. He's starting to understand Leareth's note-taking habit, if all of his important decisions are endless branching questions like this.