One of the things I am doing for amusement is going around attacking steel watch in the city, but making sure to knock out the Flaming Fist who accompany them instead of killing them. That has resulted in some interesting observations:
Ready to Die for Their Principles
When combat starts, the non-enemy NPCs generally flee or cower, no problem so far. But if you perform a theft during combat, e.g., looting an unconscious Flaming Fist, some of them who are close enough will come back into combat saying theft-related dialog like "Who would do something like this?" This includes walking into dangerous areas like the blast radius of a detonating steel watcher. Hence the post title - they are trying to die for their anti-theft principles. If you are playing 'nice', the only way I have found to save the idiots is Globe of Invulnerability - throwing them or attacks that cause movement almost always kills them and Dimension Door cannot target them since they are not allies.
I'm Fine, Mostly
Traveling to a new region and traveling back mostly restores the unconscious Flaming Fists (they wake up), except they may still be down a few HP. Not what I consider a bug, but amusing.
But I am Still Angry
Mostly their dialog doesn't change. But one (name not noted or remembered) generated a warning that the NPC was angry and allowed me to get into trading mode to check her attitude. Despite having an attitude around -50, they did not attack. Not what I consider a bug.
No Benefit for Repeat Offenders
Killing them or knocking them out doesn't give extra XP. Almost certainly an intentional design decision - otherwise you could grind a lot more at early levels.