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I think that the issue of slaves is once again a mater of context. In one manner it could be perfectly LN, in another context it could be LE, and yet again in another it could be CE.
I think the idea of using slaves giving you the heinous flag is to offset how good it is to use them. However i think that people having flags such as that would require the gains to be very very high as a near permanent heinous flag makes someone a huge target.
For undead it makes sense to me just from an IP stand.

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It seems to me that the "Universal" truths should apply everywhere, despite the laws of man. Now that does not mean that "attacking" a heinous flagged person could not be illegal in a settlement if they so choose.
Well at least we hope the granularity of the settlement laws will allow you to set an override to the heinous flag and get the attacker flagged criminal. However since the Heinous flag is a universal flag that overrides any repercussions this makes me nervous. Those two rules are at odds with another and the Settlement rule will have to trump the Heinous flag, otherwise Heinous flagged people are not even safe in their own cities.

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If you are in a Settlement and it's territory that uses/sales slaves then I don't see why you would need to be flagged with Heinous. Now if you bring your slaves into a territory where slavery is illegal or capture slaves, then that is another story.
You're talking about the law vs chaos scale. Heinous deals with acts that, legal or not, are always on the evil end of good vs. evil which is determined by the gods (GW).

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Indeed. I don't think someone who has a Heinous flag needs to worry about that in their own settlement. As far as we know your settlements will be relative safe havens; if your group has proper guards and such you should only have to worry about assassins, who would likely suffer no rep or Law penalties for assassinating anyways (as, once assassins are implemented sometime past the start of OE, that will be content GW intends for people to use just like feuds or SAD's).
Thus, even if you do get a Heinous flag inside your own settlement (or you have a 24-hour Villain flag, and you wait it off in your settlement) you shouldn't have to worry about random aggression.