I'd be fine with this tbh, as it doesn't remove the reward for doing extra work / doesn't cheapen then decision to spare/kill bad guys.. but would uncouple the level/power imbalance and keep the game challenging even for the evil hobo barbarians everyone keeps mentioning (I imagine they are also cannibals amirite?)
O yeah. Killing and eating one of the elves in the cave with the warfare vendor yields the Frost Armour skill, which is really nice.
I did a full playthrough recently where I killed literally everyone, and I earned lvl 8 with 41% XP towards level 9. So it's a noticeable bonus to get everyone all the time.
I did find one particularly notable spot where being evil was a big bonus.
When you meet the chained dragon, if you refuse to free him after killing the witch, and then kill him, you will gain over 2k XP, instead of the much smaller number. Also, he usually has an epic item on him. He will not kill the shriekers for you, but you have the wand that can kill them, so you don't need him for that.
