Dread > Chivalry ?

[Foz]

I am just curious if I get negative points for my passive spies in my own cities stopping enemies from completing their mission. Do I get dread points for passive defensive spies as opposed to aggressive offensive spies? My passive spies do nothing save sit around and protect my settlements, but they are still spies and they are still gaining skill points here and there from foiling enemy plans.

You shouldn't get dread points for this. The triggers for dread from agent missions are based on LeaderOrdered events:

;------------------------------------------
Trigger agents5
WhenToTest LeaderOrderedSpyingMission

Condition MissionSucceeded

Affects SpyMaster 1 Chance 100
Affects DeceiverVirtue 1 Chance 2
Affects StrategyDread 1 Chance 5

;------------------------------------------
Trigger agents8
WhenToTest LeaderOrderedAssassination

Condition MissionSucceeded

Affects AssassinMaster 1 Chance 100
Affects DeceiverVirtue 1 Chance 5
Affects StrategyDread 1 Chance 50

---------------------------------------------------
Identifier: LeaderOrderedSpyingMission
Event: A Faction leader has ordered a spying mission
Exports: nc_character_record, character_record, faction, region_id, character_type, target_faction, mission_success_level, target_religion
Class: ET_LEADER_ORDERED_SPYING_MISSION
Author: Lee

---------------------------------------------------
Identifier: LeaderOrderedAssassination
Event: A Faction leader has ordered an assassination mission
Exports: nc_character_record, character_record, faction, region_id, character_type, target_faction, mission_success_level
Class: ET_LEADER_ORDERED_ASSASSINATION_MISSION
Author: Lee

While it's not crystal clear on the matter, it seems to suggest the event requires an active order to carry out the mission, which you do not give when spies defend. I also cite that instead of direct failure and success messages for each spy when your spies defend against enemy operations, you get just one event message (or nothing if the enemy agent is undetected), which would break with the game's established methods of reporting missions if it in fact counted as a mission. You can even defend successfully without any spies present at all! All of these facts make it look very likely that spies can contribute to the defense of a city without it being counted as a mission or causing any dread, to the point that I'd be very surprised if it was not the case.

As for being able to use assassins and spies a lot and still have good chivalry in the end, yes it's easily possible, the flip-able traits make it so. I do sorta expect it will be changed in 1.2 though, as it looks like a small and simple fix to do. So... live it up with the underhanded yet chivalrous kings while you still can!