Yeah Melusine, youre right, rep drops when you kill him.
The thing is that rep loss depends on your alignment and/or the reputation you have before doing the deed. For example, a evil guy with a low rep will lose less reputation than a good guy with a high rep. For a nice example of this, try starting a game with a evil guy and another with a good guy, killing Firebeard Elvenhair in both of them (though its not an easy fight
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You up ?? Beware !! When falling, better fall from down