Magic items:
As a DM, I usually start by asking myself the question: Did the original creator of the item craft it for the “mass market”? If it’s a standard item and he wanted to sell it, I don’t see why the activation word shouldn’t be inscribed on the item itself, especially if it’s something with limited charges, like a wand.
On the other hand, if it’s a unique item, or something made on order for someone very paranoid, or by someone very paranoid, the activation word would be kept secret so that if it fell into enemy hands said enemy couldn’t easily use it.
Alternatively, maybe the item is very old and was build long ago by wizards of some extinct culture. Way back the activation word for this type of item was commonly known, but these days it’s lost in the mists of time, and can only be retrieved by a Legend Lore spell, difficult bardic lore or knowledge history roll, or lengthy research involving a Speak With Dead with the bones of some long-dead wizard.

Paladins:
Unless the fall from grace is a very sudden thing in reaction to some unexpected and outrageously evil act the paladin did, the road from paladinhood to fallen paladin is usually a journey, not a lightswitch. I find it only fair and polite to include some warning signs along the way, especially if the paladin in question is a player character. It’s only logical that a deity should not sit by idly while one of her paladins drifts away from her. Some ominous dreams or omens to direct the paladin back to the correct path and strengthen the goodness in his heart should be in order. Aftrer all, no deity wants to lose a paladin. Even if atonement is possible, it is a lengthy process. Better to catch the paladin when he begins to stumble than wait until he has fallen flat on his face.

And yes, the fall of a paladin should warrant a few special effects. What DM worth his or her salt would forego this golden opportunity to break out the dramatic music? The heavens opening up, etc. A paladin usually should not not only that he has fallen but also why. I hate DMs who use this Damokles Sword of “Oh, your paladin might lose his powers for even the slightest misdemeanor!” as a punishing stick for players. you don’t fall for one non-lawful action, but for an evil act committed willingly and knowingly, or if your alignment changes away from LG permanently.

The unfortunate association here is of course the idea that (male) unicorns can only be tamed by a (female) virgin. We all know that some people (esp. boys between the ages of 15 and 20) find the word “virgin” hilarious. Worse, the unicorn proceeds to lay its head, with its big phallic horn, into the maiden’s lap. (Nothing beats mythology and religion for dirty jokes.)

Solution #1: Let the paladin take the Exalted feat “Vow of Chastity”. Heck, I would give it to him for free. And then let the rest of the group run into a lots of succubi and warty green hags and harpies who mindcontrol the other male characters into having sex with them and drain all their…*cough*… all their character levels and constitution points. Yeah, definitely constitution points. Problem solved.

Solution #2: Make the unicorn big and black and manly, with lots of muscles and a shiny black leather harness with studs, and… no, no, on second thought, that’s even worse.

Oh, sorry Kevin, didn’t mean to step on your toes