This applies more while levelling:

Personally speaking I don't think it is realistic to take the approach red=dead (as much as I would like to at times). You have to think of the practicalities. If you kill EVERYONE you see just because you can and they the enemy you end up with a problem - a whole bunch of people in your area just waiting to add to your fight if you get a bad pull and maybe killing one of your chars. If you had just let them be they generally let you be.

Also if you take red=dead approach you have to try to kill any ?? level enemy in your area - or are you a coward? :P