Degeneration is fine, and can be done. It's the points of degeneration that undermines it really.
This. Their notion of morality is insane. Every soldier is a raving psychopath in White Wolf's universe -- which is a unique take on the Greatest Generation -- and Jean Valjean would likely suffer humanity loss for stealing that loaf of bread.
FATE is always the suggestion, and from what I hear a good one. I think Wild Talents would work, too. That might be a more action-focused system, but I'm not really informed about FATE to make the estimation. Though looking at the OP, it seems like FATE would be more suitable.
As a side note, I did do a quick rules-lite version of Vampire once upon a time inspired by the old LARP rules. It's mostly just stat+skill pool v. other stat+skill pool. But, disciplines were a big issue, which is what made me kind of drop it. That, and I sort of hate the White Wolf system, so it didn't seem worth saving.
Finally, for morality, I kind of like Burning Wheel's trait vote system. The idea being that if someone does something inhuman and immoral, then everyone around the table should have noticed it.