I apologize if this is already known or if there is a better way of doing it, but I searched around a bit and wasn't able to find a strategy that worked. I figured at the very least I could put it here so that others could find it after this thread is indexed by search engine crawlers.
This is valid for IWD:EE 1.4.0 (and higher?).
In the Northwest Tower of Castle Maluradek there is a paladin named Harald who asks you to kill him. Your choice is to leave him to his fate or put him out of his misery. Killing him will allow you to take his items (notably his Gauntlets of Weapon Expertise and Morning Star +4: Defender), but it will cause your reputation to drop by 5 points. To avoid losing reputation, get enemies to kill Harald for you. This way, everyone wins.
To do this, I first prepared two spells: Domination; and Invisibility, 10' Radius. I cast Domination on Harald; this can take a few tries but the spell will eventually stick. This turns his indicator green, making him a target for enemies. (Off the top of my head, I can't remember if enemies can target NPCs with blue indicators.)
Next, since Harald cannot leave his room in the Northwest Tower, you have to find enemies to bring to him. I used the spiders in the Offering Room on the east side of the castle courtyard. I went in, got the spiders' attention, and carefully lured them back into the Northwest Tower. I suppose the harpies and wyverns in the other towers will work as well. Once back in the tower and the spiders started populating the room, I positioned my team away from Harald and hid my team with the invisibility spell I had prepared earlier.
At this point, the spiders couldn't find anyone to attack except Harald, so they swarmed him. As soon as he took damage, his indicator turned red and he just wandered around the room looking for my team to attack, while the spiders just kept on attacking him. He never fought back. I'm not sure if this is intended behavior, but after 5-10 minutes of this, the spiders finally killed him. Harald died, and I got to take his stuff without incurring a reputation penalty.