Soubarites Turning Hostile Unprovoked

[Zeikari]

I am unsure whether this is a bug or not, but I thought it might be preferable to list it, just in case.

Today, another player and I experienced a sudden, unprovoked burst of hostility from the Soubar toons (specifically the hobgoblin blacksmith, the masked tiefling, and the Skeleton guards of the alchemist Priya).

This is how the event took place:
1) The other pc and I were arguing (IC only, obviously), and it escalated to violence. We were in an empty space between the north gate and the market square (near the fireplace with all the flies buzzing).
2) I toggled hostile.
3) I struck the other pc with a simple, targeted melee attack (which ended the fight, as the level difference was pretty lopsided).
4) The npcs attacked.
5) Not wanting to make a mess, I turned ethereal.
6) I toggled off hostility towards the other pc.
7) Removing the etherealness, noticed that the npcs had stopped being hostile too.
8) We went back RPing.

Now, from what I recall, Soubar should be something of a lawless free-for-all, so, if two pcs fight, the npcs shouldn't care, unless one of the pcs uses some area effect feat/spell that ends up targeting them (which definitely wasn't the case in the above instance). Sooo... is their behavior glitched? Or was this reaction intended? If so there might be a need for some warning IC (like Mag's "don't cause trouble" sign for inside the inn).