So a summary seems to be, if you get to ACT 3, and smash a few faces in to get past the gate, to the first town area, the NPCs hate your guts and don't forget.
Like some rain man they sit there thinking and looping "they killed some of us and stole our stuff... They killed some of us and stole our stuff.... The killed some of us and stole our stuff".
This also explains why it's an ACT 3 as this is where you kill some NPCs with many other NPCs around to progress the game.
I can only guess there is some non-combat way to progress past there that I don't know of, that the people saying "there is no bug" are using.
What doesn't make sense is why if I start off at the end of ACT 2 with an old save and do the same thing, why my old save doesn't have the issue.
