XPs: What about having "party XP" (because that's what the party has accomplished to date) rather than tracking it per-character? Apart from the dead/alive issue, it would also avoid the problem of hirelings ending up well above or well below the PCs' level depending on when you meet them.
Area Damage: This is problematic in another way - if you're out of combat and the NPC is stuck in a zone created by a PC during that battle, they're liable to trigger the "Stop that!" dialogue... but they keep taking hit after hit from the zone while you're stuck in the dialogue. If this doesn't kill them before you close it, it'll still have pushed them well past the "I hate you and will kill you now!" point (the dialogue for which promptly pops up after closing the other one, as they continue to stand in the zone taking damage...)
This can affect other situations where an NPC is considered 'out of combat' while one is going on around them. (Spoiler Warning) It happened to me in the Evelyn fight last time around: Jake is lying on the floor, not taking part in the combat, as expected... until an NPC's fire zone ends up covering his space. He burned to death very quickly in real time even though the scene around him was turn-based (and no turns were being taken).
