It's impact that determines reputation. I love the idea of taking prisoners, I must admit, and the removal of the bandits by any method will please the villagers just as much I have no doubt. The inclusion of a magical prison which you could carry around to keep prisoners in is something I have wanted to see in a CRPG for a long time.
Great idea!
The idea of giving EXP for 'defeat' rather than 'death' is a good one and would allow for many variances.
A game that acually did this was Vampire:Bloodlines. You didn't get any experience points for killing opponents, you only got them from finnishing quests. This way you got just as much experience if you killed everybody as if you sneaked up behind them, did what you were supposed to do, then sneaked out. Sometimes you even got rewarded if you weren't seen!
Übereil
