to answer your post, it does work, just not perfectly by any means. Every murder count you give them lowers their reputation with that particular faction. When their rep gets low enough they technically become unwanted in that town, and besically red for that faction. Its just that their flag doesnt show it. But they still cant enter town.
at that point you can kill them and they cant give you murder counts. So besically their flag will still be blue, but they are “red” and you can kill them without consequences. Its like hidden red flag.
its a bit of a convoluted system but still waaaay more forgiving than the old system where after 5 murders you were red to every single town. And each murder tok 8 hours of ingame time to wear off. And there was nothing you could do but wait it out.
kids these days have no idea how easy they have it. And still, here they are, complaining.
Hate to say it, but with the current system you can't go back into towns (currently) ever again if you drop below a certain reputation. That isn't easier, that is harder.
I don't know why in a lot of posts you try to come off as someone who is experienced or knowledgeable about these things but you don't really convey that in your posts.
What's easier?
1.) Playing the game and naturally over time gaining the ability to go back into town.
OR
2.) Having to run packages across the map everytime you want to PvP, and if you don't you're perma-kicked from a town.
I thought this was pretty obvious to most people, but the current reputation system is much harsher and convoluted then the murder-count burn.
They're both shit systems, but at least one eventually let me come back to a town if I wanted to.
The system would be better if the NPC's were just outside of the towns as well, and more opportunities to raise rep besides package deliveries were added.