1. I think it would be cool if you could keep track of how much you are hated by the NPC's we kill. Most simply it is a count of kills for each NPC organization, but possibly could measure in both negative and positive reputation. (I talk about that in part 3)

2. It could be used as a requirement for specific missions relating to the organization itself, and possibly could lead to bonuses and/or penalties to NPC spawns. (like if you defeat a lot of Dark Smugglers Guild ships, they show up less frequently as they learn to avoid your sections of space. The oppisite for Crimson Blades, who would jump at the chance to kill you.)

3. Another suggestion is the choice to join the organizations, giving easier access to their modules. (the harder the module, the better the reputation you need to get it) This reputation increases slowly over time if you ally with them, increases with player kills against people they hate (those with negative reputation), and also with missions they give. It decreases with killing their ships obviously, with a bigger decrease for killing rarer ships of that organization.

4. As an additional effect of their reputation, they might randomly do stuff for (or against) you. For example, allying with the Rouge Science League may grant a small amount of bonus research. Another example, while enemies against the Stryll Order they might infect your ship with a genetic mutation. A simple way of doing this is adding 1 random effect of all the reputations you have to your daily reward, with a higher chance of somthing happening the higher (or lower) your reputations are. (It is possible that nothing happens that day, but most likely not if your reputation is the quality of sewage)

5. just like reputation names for PVP (like menacing or feeble) I think it would be cool with names for each of the reputations. For example if you are moderately allied with the Crimson Blades, your reputation with them is "Sword Arm" and if you are greatly despised by the Drannik Automatons, the reputation is "Flesh Bag"

Yeah, nice idea there.. Adding NPC faction system in game is another interesting facet of the game for sure.. Like Dan said before, he wanted to focus on fixes first before adding new stuff to GL. This is one of good stuff to be added down the road for sure..

+1 from me, a deeper faction system would make the game even more appealing than it already is.

But as Noci said, bug fixes come first, so add this to the "will do later" list rather than the "to do" list.

definitely has potential to create a deeper storyline and more invigorating gameplay

Excellent idea Zophah