Emotions = Good or Bad?

I am thinking a little bit about how emotions become "shoulds" or "shouldn't". How is it that something a person feels becomes a source of moral shame, and then prohibition? The reason I am thinking about this is that we had a Surangama Sutra study group this afternoon where we talked about the Buddhist notion of karmic retribution: how, for instance, an animal must live its life in retribution for previous deeds. When the animal has finally completed its retribution or has "overpayed" retribution, it then has the opportunity to become a human. It's only when there is a Buddha around that these sentient beings (animals, humans, etc.) can come to realize that the entire back and forth of retribution is a complete delusion. It's similar to the hand: a hand is simply a series of separate moments, forming this concept "hand", when in fact they don't come together at all to form any enduring identity whatsoever. It's all an illusion to say that they are unified. Yet the mind creates these dreams and nightmares.
  To go back to my topic of emotion and karma: many people interpret the meaning of this section of Surangama Sutra as "you are being punished for doing bad things, so you are an animal in this life". In other words, rather than seeing the situation simply from the perspective of the natural function of cause and effect, there is an additional moral approbation tacked onto it. But I am wondering, what would it mean not to attach any moral approbation to the causes and conditions? Instead, what if I were to simply see karma as a natural law, no different from the laws of gravity or the conservation of matter and energy?
   The problem is that people just don't do that because they are afraid that not morally grading things is going to lead to chaos. The result is that we simply are unable to work with emotions, because they are either repressed or denied, because they don't fit with the idealized image we have of ourselves: "always happy", "pleasant", "easy going", "able to accommodate everyone" etc. Paradoxically, the lack of integration of such emotions can lead to a certain brittleness. Again, is Buddha really saying that certain beings do "bad" things and are therefore "bad"? Or is he really saying that certain states of being create certain consequences and therefore should be studied in some way to prevent painful outcomes?
  Emotions could be de-stigmatized, at which point they can become ways for us to reflect more deeply on ourselves and why we suffer. But if there is a moral meaning attached to emotions, it becomes nearly impossible to see oneself clearly.