White Buffalo, it isn't expressly said what occurs to Alain, but he does speak of a Templar entering his room at night and him being threatened into staying silent on it. So, I do think we ARE supposed to draw the conclusions on that.
But I think people are being way too Anders-ized in their conclusions. The Gallows is hellish for a circle, and while Anders WAS put in solitary confinement in the Fereldan circle for continuing to try to escape, the fact is, even a mage in DAII comments on you being from Fereldan and how she's heard the circle is a lot nicer there. Even Starkhaven's circle was burnt down, which Sebastian references when he lists people who his PARENTS WOULD HAVE RELIED ON as well as the Templars. In other words, the implication is that the king and queen of Starkhaven at least had a friendly rapport with the mages, much like we also see echoed where the circle of magi sends mages to fight at Ostogar in the first game. This whole "Down with all templars everywhere/they're all evil" mentality that Anders had is unfortunately fueled by the fact that things really are screwed up in Kirkwall.. on BOTH the Templar and Mage side.
Anders never dealt well with being in the circle, but there are legitimate abuses within the Kirkwall circle.
Back on the subject at hand, Merrill seeing the risks clearly just makes her more the fool for wanting to make deals with the demons. Anders should have seen the risks in Justice, but you have to remember that Justice was his FRIEND at that point, and that the Warden and Anders MET Justice when Justice was in the fade trying to take down someone evil from imprisoning an entire village in almost an eternal hell. It's the same way people try to justify Anders now... because the player met Anders before he killed innocents. And I don't mean just the Grand Cleric. Remember there was burning debris over the entire town as a result of the explosion. You really think no children got caught in that? The fact is, Anders did something horrific, but people want to find a way for it not to seem so horrific because they became attached to him. Anders had only seen Justice as someone who basically wanted to do the right thing at all times. Justice's corruption may have been slightly hinted at, but really, he doesn't WANT to be stuck in Kristoff's corpse. And blame Nathaniel. Go read the dialogue between Justice and Nathaniel on the Wiki:
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Nathaniel: What if you found a living body to possess?
Justice: Even if I knew how, I would not possess the living. Such is an act for demons.
Nathaniel: What if the person were willing?
Justice: Why would a mortal ever allow such a thing?
Nathaniel: For life. For love. Perhaps together, you can do what they cannot do alone. If you gave instead of taking, I would consider you no demon.
Justice: It is...something to consider. Thank you, Nathaniel.
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Another conversation, this time between Anders and Justice, sad in retrospect:
Anders: I apologize, Justice. I didn't mean to suggest you would become a demon.
Justice: I should certainly hope not.
Anders: I just wondered what relation there is between spirits and demons. Demons are a worry to any mage.
Justice: I do not know what makes demons as they are. Such evil angers me, but I do not understand it.
Anders: Well, I hope you never come to understand.
Justice: I as well, mage. More than you could possibly know.
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Justice makes a clear distinction that even he is worried about what defines a spirit or demon, but I do believe from what happens when you take Justice into the fade and he becomes the dominant personality instead of Anders, he is still set on making sure the boy will be okay. Justice has become something darker, but there is still a distinction between what he is and what a demon is. Justice is twisted.. maybe what we would term 'insane' now. But at the root, he is still distinguished from what a demon is to me. And I say this as a person who never even liked the character of Justice.