UOX3.org

Monsters with "flag evil (red)" become "criminals - flag neutral (gray)" during a period of time being attacked or initiate an attack against players or monsters.

I can not tell if this happens with players killers too.

I do not know if this above is normal, but I think it is the same thing happen if he were innocent, but already is evil and does not need become a criminal / neutral, LOL.

It does not happen with murderers, no (just tested, and the murderer remained red).

The way this system works in UOX3 is a bit unusual. First off, we have "criminal-status"-flags, for both players and NPCs, which goes like this:
Innocent (blue) / Criminal (gray) / Murderer (red)

However! There are also NPCFlags that can co-exist with (or override) these;
Innocent (blue) / Neutral (gray) / Evil (red)

Look, here's a npc with "flag = evil", when I start attacking it, passes a few seconds and the life bar and name which was evil (red), become neutral (gray). Over time he becomes evil again, but I do not know then what happens, but it happens here...

Fix committed to GitHub, experimental build available.