Is Kong Yuanliang bad?
At his level, it's actually hard to judge a person, or a matter, as simply good or bad.
As the Sect Master, Kong Yuanliang's position must align with the majority of the Penglai Immortal Sect; his primary consideration has to be the internal interests of the sect. Therefore, many times the decisions Kong Yuanliang makes aren't necessarily what he desires, but they are choices that benefit the majority.
People are complex, and so is Kong Yuanliang.
You may say he is bad, but a father who travels the world for over twenty years just to find a way to save his daughter, day after day, can such a person be considered a bad guy?
But to say he is good, the Penglai Immortal Domain harbors enmity towards the secular world, resulting in countless slaughters. Even if Kong Yuanliang didn't participate directly, he must have indirectly acquiesced; otherwise, how would those below dare to act against orders under the guise of following them?