What to do with the Ring of Gyges

Plato's story about the Ring of Gyges is an extreme hypothetical but it does serve a valid purpose in fleshing out whether appearances matter more than truths.  I would agree that it is far better to be moral than to merely seem moral, as there is damage to one's soul which impairs the ability to experience true happiness, but the situation he presents is even more dire.  The soul is indeed more important than the body and Plato explains this view well.
Rather than simply comparing appearance versus actuality, he states that a man who seems moral but is actually evil is worse off than a man who seems evil but is really a saint.  This is a harder concept to swallow because both men are in bad situations.  A man who is full of vices, even if he can hide them well and receive honor, still will never have true happiness.  There are countless examples of addicts and hedonists who search for means to happiness through carnal pleasures but never receive a respite from their search, so the appearance is less important than the actuality of being moral.  The man who is moral but seems immoral is in a bad situation not just because he receives no honor and is disliked by the city, but he is likely to appear like a pariah and may receive physical harm due to the society's perceptions.  Society can often get morality wrong and there are many examples of innocent men suffering because of misconceptions (Jesus often springs to mind) so it is not outside of the realm of possibility that a man who is truly good could seem bad because he goes against a corrupt nation's laws.
As the 1930s and 40s have a perfect example of evil, I feel it is appropriate to draw from that.  This hypothetical could be fleshed out to mean is it better to be a Nazi or a Rabbi in Hitler's Germany?  Obviously both situations are bad (one for the soul and one for the body) but which is truly worse?  When speaking of this we mean a fervent Nazi and a devout Rabbi (this is to prevent muddling the argument with examples of soldiers who helped smuggle Jews out and also prevents the atrocities some Jews did to others in the concentration camps from confusing this issue).  I'd like to say that the Rabbi is better off, but enduring the hardships one faced within concentration camps (which can parallel a good man being thrown in prison for appearing to be guilty of crimes in the Platonic example) caused irreparable harm to many Jews who went there and one can assume that there would be harm to the souls of the good men in the misguided city.  There were some people who came out of the camps and were unable to tame their inner demons (or the various bestial elements of a man's soul for Plato).