What do you feel makes a good villain?
A good villain is one that evokes an argumentative response, or feeling of hatred from the viewer/reader.

How do you use villains in your story?
I use them to balance the story. Everyone in life sees someone as some sort of villain, not because they are evil, but because they get in the way of your own ideals. Being a villain is a readers perception of how someone influences your protagonists story in a negative way, and a good villain ruins or interrupts the bliss or goal of the story/protagonist.

If you write a villainous protagonist, how do you strike a balance between their actions and their palatability to your audience?
I like my villains to be selfish, this is because I think it's a key component in ones arsenal to be considered a villain. You look at any "evil" type character and they generally have one thing in common, they are selfish. Be it their reasoning, their goal, or their decision making. This doesn't mean to say being selfish makes you a villain, but I find it a strong way to help others take offense to your motives, as well as explain their own motives, cause who doesn't understand being selfish?