My rule of thumb is to avoid them where possible. Once someone makes it to my "jerk" list, I basically write them off. I never stoop to their level or seek revenge; it's not worth the karma hit.
Hmm, no. I think I'm mostly a good and decent person (although there are those who might disagree, natch), but I can see both the good and bad in people. Being good doesn't mean being blind. It simply means being aware that both things exist in that person. Being good might also define how you handle any given person.