I've been having great fun with this game recently. I am still in act 2 and heavy spoilers about the future chapters should be avoided . Keep it vague please...

This is my stance with the main factions (so far)

Gilded  Vale: Champion - Overwhelmingly good

Defiance Bay: Hero - Moderately Good

Crucible Knights:  Hero - Moderately Good

The Dozens: Troublemaker - Faintly Bad

The Doemenel: Neutral

Improving my faction standing with the Crucible Knights will further damage the relation with the Dozens... is it worth it? 

Mind you, I have been fighting assassin in the streets of the city even before my relationship with the dozens soured. I believe that it came from the quarrel with the noble over Caed Nua... I wonder... will it gets worse if I create a few more enemies?

Avoiding spoilers as much as possible... most of the assassins you fight in the street are not from any of the factions you can ally with.

First time I played the game I assumed they were all from the Doemenels since I'd had a run-in with them before. So, exasperated, I kicked in their door and massacred everyone in the building. A bit embarrassing when I realised they weren't actually behind the attacks. Whoops!

The reputation system doesn't really matter too much. Which faction you side with is determined by choosing their second quest; dialogue from the questgiver warns you that those quests will commit you to one faction and alienate the other two, but a lot of people still don't realise that they've already committed to a faction. Ultimately you can't please all the factions. You will eventually have to pick a side.