If you're fighting with "neutral" npc's, pain reflection makes them agro on you. For example: if you turn in the lizard that stole Griff's oranges but feel bad about it and want to help him survive the thug Griff sends after him. Generally the fight goes fine unless you accidently clip him with something like ricochet or marksmen fang but if you have a character with pain reflection and he uses a spell like fireball then he will become hostile towards the party as a result of the damage being reflected