I would love to be able to kill everything, there could even be quests tied to this.
Say you kill a child in a city without being detected, the next days the town folk would be chatting about the child murder, kill some more and the militia gets involved in a search for this serial child murderer. They might even offer a reward for this killer, this is where you come in and plants evidence on some unsuspecting innocent man and reap the rewards, or you can get caught and thrown in to jail to be executed.
I would love to see things like this happening instead of just 50 guards showing up to kill you when you 'accidentally' decapitates an annoying kid.