style - Should a narrator ever describe things based on a character's view instead of facts?

There is something I find myself doing often while writing, and I don't even know what to call it, but I would like to know if its good practice. It happens when I'm writing from a third-person perspective. It's where the narrator begins to describe something based not on truth, but on a character's (potentially skewed) perspective. Here's a random example:

There is a peaceful alien race that has never done anything bad to humanity, however John falsely believes that these aliens killed his father, however the reader knows that this is not true, his father's death had nothing to do with the aliens. So the reader knows these aliens are innocent, and when John is saying bad things about them the reader will disagree with him. There are two ways I could narrate this

1: the 'plain way'

John thought to himself 'Those wretched slimy creatures! I hate them!'

or 2 is the way I'm asking about (that I don't really know what to call)

John thought about how much he hated those wretched slimy creatures.

Obviously those 'wretched slimy creatures' are not as bad as John makes them out to be, and the reader and narrator both know this. Is it a good idea to have the narrator describe them as 'slimy wretched creatures' when describing John's opinion of them, or just to use the 'plain way' by not even appearing to adopt John's view and just tell it like it is. Personally I prefer way 2, because it makes it more interesting and less plain, but I don't want it to seem like I'm contradicting myself.

Answer

This depends on the narration. If you have a third person omniscient narrator then they usually would describe things in a fair and even way. Most modern writing though does not use an omniscient narrator. Most writing is done in third person limited.

In third person limited the camera stays consistently over a specific character's shoulder for often at least a chapter if not the entire novel. In this case the narrator should absolutely take on the characteristics of the character being followed by the camera. All descriptions should be done through the lens of that character. All his knowledge and prejudices should be applied to descriptions. If it a character would not know what something is, the narrator should describe it in that way. Explain how the character sees the object, not what it is by name. If the character has beliefs then the narrator should have the same beliefs about the concept.
This is often a great tool if the camera ever moves to another character. The same things can suddenly be described in completely different ways. This can give the reader a great depth into not only your characters but also the setting.