Just to confirm before I go on my rampage. I can kill all the dragons and kill all the dragon hunters for most XP and rewards, without screwing up the Alliance quest? It's not an either-or? Just so long as I do this before handing over the Alliance "item"? If so, that's really sweet :) Killing everything in sight, here I come.

ZFR is on a rampage!
Someone stop him!

That's why I prefer MM6 over later games in the series - you can be impartial and plunder everything without any concerns about factions.

BUTCHER ALL THE THINGS!

Just like murdenating your way through a faction in previous games, you'll be fine here too. If you like, you can even turn in the alliance quest item and THEN slaughter everything you can find, just to be sure the relevant "throne room" doesn't lock.

But that way the quest giver of the opposing faction won't reward you.

Throne rooms don't lock here fortunately :)

Same bug appears in the Dragon Slayer's fortress. Saving and reloading turns them green. Though exiting and reentering the prohibited areas turns them hostile again.

Well, that makes MM 8 factions sound quite complicated... And it is probably one of the reasons why I couldn't really get into MM 8.

Probably exists for all four factions, then. Maybe even the minotaurs, though you can only make them hostile by attacking a peasant or guard.

And in the dragon cave, same thing happened as expected, but after leaving and re-entering the cave, it was... repopulated.

I could cry. I killed all but the last few dragons. I suppose you could say that gives you more XP, but it's tedious, buggy and I'm not sure how it'd affect the "kill all dragons" quest. So unfortunately I had to reload a previous save from before leaving the cave. It would mean I lost the artifacts I gained (nothing too big, but I liked the Tournament bow which was the only negative effect relic I was willing to use), and will have to repeat all those painful dragon fights (you can't fly in the cave and meet them on your level).

Lesson learned: if you need to reload, do it and then turn them red again by exiting and reentering the restricted area (or simply attacking them), but don't leave the cave.

EDIT:
The repopulation seems to be a one time glitch. I can't seem to replicate it. Still I won't get out of the cave till I clear it, and even then, I'll save before doing so.

EDIT 2:
Killed all dragons, got all items. Saved before exiting.
If I leave, rest and re-enter all dragons get respawned.
If I leave and re-enter, no dragons appear at the entrance, however if I go to the restricted area, I get the warning message, and if I continue going, dragons appear in the deeper caves.
No items respawn.
Hope it won't mess up my quest to kill all dragons.
On to the dragons outside. Thankfully those are much weaker (hatchlings and dragonettes mostly) and I can fly.

I seem to recall that going into the restricted area causes a bunch of dragons to spawn. I wonder if the extras are removed (the survivors, anyway) when you leave the area (or load a save), and are then spawned again when you hit one of the spawn triggers.

Good catch. This does seem to happen, though the respawning of dragons on re-entering is a separate issue. Did more testing:

_Without leaving the area.
When you save and reload, all dragons turn green, and the extras that were spawned disappear. If you however hit the trigger again, they turn red again, and the extras reappear. Dead extras behave correctly: if they died they stay dead.

_If you leave the area.
If you rest (spend time?) outside, or if you enter the restricted area after re-entering, then all dragons reappear. Including those at the entrance and on the other side on the road to their king. They are all hostile.

Interesting. Well, I don't think they promised a bug-free game. Still fun though.

Have you visited the three temples yet? :D

Eep? Yes.

This has been a running joke since MM3 :D

Really? I didn't get through MM3 when I first tried, many years ago, and I haven't started 4-5 yet. I figured Eep was a run-on from the Temples of Baa. You've probably noticed, but I'll say it anyway: take a look at the temples on your map.

What did 3, 4, and 5 have?