edit:
ok, you can at least limit the hit to one of your hirelings instead of your mains if you detach them from your party, and have them trigger the event.
Good to know.

It's a very annoying bug indeed. Here's what I did to avoid the reputation hit entirely:
- I gave all five guards a tenebrium bar, which will make them rot.
- I placed my characters in a way that all five guards are visible. (They don't continue to rot if you're not nearby.)
- I watched some tv until they were near-dead. (They won't die from rot, they'll be left with 1 hitpoint.)
- I had one of my characters pick them off one by one, making sure the kill isn't seen by any of the other guards.
Because you can instantly kill the guards this way, they don't have time to ring the alarm bells and you don't suffer a reputation hit.
