This is just my opinion about functionality of city guards. As we all know,
city guards may not be used for player killing purposes (says on help file),
and aggressive city guards must be placed so that they are not in the entrance
rooms of a city.
Rules that are stated in help files point out very clearly how guards should
be put. The common rule seems to be blocking guards to prevent movement inside
the city and aggressive guards behind these preventing guards to attack city
raiders. With these two options you are able to create a safe city that is
protected from attackers, and also makes it so that civilians don't get killed
in these places where they should not be.
Now to the point that amazes me. These city guards have this possibility to
make enemy lists. I would think that everyone who enters area with aggressive
guards is considered as a thief as they should have killed the blocking guards
beforehand before being able to enter there. My opinion is that this enemy
option makes it only able to kill people in area that should be considered
safe from visitor's viewpoint and this is something that I don't understand as
this is stated illegal in help files.
As I posted on this same issue before, Duke cared to reply (thanks for that)
and he stated that player cities with attacking guards in entrance rooms are
illegal. I don't know if Duke meant only the rooms that are entered from
outerworld, but from my viewpoint it doesn't really make a difference if the
attacking guards are in that first room or in that second room, since I have
exactly same chances to know if my ass is getting whacked in that city when I
go further.
Just some thoughts.

--Darol