Why shouldn't we judge historical figures my "modern" moral standards?

The real question at stake here is the role of personal ethics in the academic study of history. I don't think you will find many historians (moral relativists excluded) that would argue that we can't have strong opinions about the actions of people in the past. People in the past have done what I believe to be some pretty terrible things, and others have done what I believe to be some great things, but when I am trying to study the past, to understand how and why things happened they way they did, and how people understood themselves and each other, my judgments and opinions of their actions are frankly irrelevant. My opinions and feelings about the ethics of past people do not contribute to a more accurate reconstruction of the past; if anything it gets in the way.

I am not saying we can eliminate our biases. We can't. Every historian brings them to the table. The best we can do is be aware of them and attempt to confront them whenever possible. Approaching a historical figure with the judgement, "X person was a terrible individual" defines what narrative I am going to construct from the outset. I have my bad guy and how I read and interpret the remaining evidence will ultimately be colored by judgment. When historians insert their moral judgments into the historical record, the material they produce bends around them, resulting in a history that is ultimately framed in terms of our own moral perspective.

While the argument could be made that the very activity of historical writing is ultimately framed in terms of a modern perspective, the deliberate insertion of moral judgments into the past certainly does not help the matter. There is nothing wrong with having strong takes on the ethics of the past, but we have to do what we can to limit their influence on the history and writing we produce, otherwise we risk a history that is more a reflection of our own moral judgments than an accurate picture what actually happened.