There's a subtle difference between killing mobs and murdering NPCs. Maybe it's just me, but I was the same way when I played Everquest years ago... there, the best thing to do was to sneak parties of the hated races (Trolls, Dark Elves, Iksars, etc.) into human cities and just massacre all of the guards, merchants and other NPCs. Whereas I don't neccessarily approach Morrowind in the same manner, that is, I don't kill everyone who mutters "Outlander" or some other negatively-themed comment when I walk by, there is a probability of me sneaking up with my sword and looking for the "Critical Damage" message on those damned merchants and other NPCS who say things like "Faction Members only, Redguard" or who otherwise give me a bad attitude. In this regard, I can still play a "noble good guy" character, just one who also demands respect from the NPCs, after all, I am busting my tail trying to save their world from Dagoth Ur, despite being an Outlander. So, least they can do is be nice to me... and... if not... they might get bumped off.
[color="Blue"]Cross me. Fear me. I walk free.[/color]
The Freewalkers, Meridian 59's last great guild