Well I can say from earlier today that the game does have some sort of reputation system. My new party was fighting the goblin raid encounter at the targos palisade. My rogue tossed a fire bomb into a group of goblins, and it accidentially also damaged Niles. Niles and Olap both went hostile on me, had to kill them both. Then when the battle was over, I went to talk to Shawford and he was hostile as well - although when I killed him, the games ends because he's central to the plot. Luckily I had saved before then.
But I don't think anything you do can change your alignment in IWD II.
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There\'s one dwarf left in Moria that still draws breath!
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