There was a certain Paladin that was crying for me to kill him. I had a Paladin, so I took a guess what my price might be for killing him.
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***Spoiler Ahead***
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If you have a mage with access to the Disintegrate spell, then zap the "blue" person/creature you want to lay waste to and run out of the room [it has to be an area change--it probably won't work in Kuldahar.] Wait a short bit, then, if the spell didn't save, you will see the person/creature give a "death" sign and then go collect the goods...your reputation still intact!

Note: It didn't tell me that I lost reputation; so I hope it didn't do it "behind the scenes"--as it were. The Paladin above is worth 5 rep points, and I think it takes 6 or more to put your Paladin/Ranger in trouble--so my Paladin would not have Fallen anyway.

Nice trick.

Err, pardon me for being dense... but which paladin was crying to be killed?

The Paladin is...
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A Fallen Paladin named Harold in Castle Maluradek.

Note that I went and slept someplace first--it still told me Harold died when I walked back into the castle tower 8 hours later.

Finger of Death won't work; by the way, it's too fast. The Disintegrates' time lag before confirmed death is the bug you get to exploit.

Ah, right. Forgot about him. I've taken a break from IWD lately; too busy, and my insufficient free time has been taken up with the Disciples II demo.

So what kind of XP do you get for offing him?

Anyone you zap this way will gain you NO experience--a fair price for not losing any reputation!

Ok then, what kind o' items do you get? Is there an actual game advantage to doing this, or is it a "funny things you can do" type of action?

The Paladin has most items that can be found/bought elsewhere in the game but one:
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Gauntlets of Weapon Expertise (you only get one set of these). If you have two fighters up front, then the extra set is REAL nice [+1 THAC0, +2 Damage.] He is a FALLEN Paladin, after all. I think the game designers should have had him give the items to your Cleric or Paladin [so he/she could donate them to the church and all--a step toward getting his Fallen status taken away...yea, that's it.]