I'd have to say that killing probably SHOULD play rather a large part in defining alignment/reputation. A bit of indiscriminate massacring should have a heck of a lot more influence on how people think of you than whether you managed to retrieve Generic Quest Item A.
If you wipe out the local bandits, their victims will love you a lot more; if you wipe out a local village pretty much everyone will hate you, including the bandits (You're a rival AND wiped out their normal victims. Who will grow their food for them now?).
It should not be the only determinator by any means, but I think it's an important one.
