The character of Noah Cross is ranked by the American Film Institute as the 16th best film villain of all time but I don't know that he belongs on that list. Noah Cross is a perverse, power-hungry capitalist titan and John Huston plays the part to perfection; no melodramatic overacting or hamming it up for the camera. You get a sense that he is disturbed and somewhat crazed, but he is also driven by the greatness of his vision.
If you see the sprawling megalopolis that Los Angeles is today, you will better understand this character. Many of Noah Cross' lines, like "Hollis Mulwray made this city" and "The future, Mr. Gitts, the future" (spoken with a demented intensity) resonate with a certain amount of relevance today. People like William Mulholland (the real-life head of DWP in the early 1900s and the inspiration for Mulwray and Cross in the film) did build the world as we know it. There are visionaries in all epochs who will pursue their vision with a singular tenacity. They cannot be domesticated by societal conventions or the will of other men. Napoleon was such a person; so was Alexander the Great, Winston Churchill, General Patton, Julius Caesar and many other historical figures who have helped shape and reshape the tapestry of our world over the decades, centuries and millennia. Noah Cross is such a character. His motivation is therefore not evil. He is merely obsessed with the vastness of his dream, which drives him to murder, lie, cheat, steal and commit innumerable other moral offenses.
The twist to the character is his perverse sexual proclivities which are ingeniously shrouded in ambiguity by Robert Towne. No explanation is ever given. When Gittes asks Evelyn if her father raped her, she starts to shake her head then stops in that peculiarly neurotic way she does everything. We never find out why he really wants Katherine back (L2R's theory is outlandishly silly and goes against the grain of the film). The act he commits is so taboo and morally foul that we condemn him for it, are disgusted and repulsed by the baseness and depravity of such a character.
The explanation he offers leaves the issue open-ended. "Mr. Gitts, most people never have to face the fact that, at the right time and the right place, they're capable of... anything!" Disgusting as his offense is, the statement does get at a fundamental human truth. Human beings are indeed capable of anything, given the right circumstances. Even incest.