Is SetAV the best way to change an NPC's aggression and confidence? The reason I ask is that I used SetAV before with Health and got some awful side effects. I don't want to make that mistake again.

In short.. using SetAV is the same as if you opened the npc in the geck and changed the number on the tab yourself. It will affect everything that comes after so use only when absolutely necessary.
I'd say the preferred way to temporarily modify stats is via DamageAV and RestoreAV. Those will change the game modifier value for the stat, will be remembered in the save game, can have the changes it makes reversed by other ingame modifications like acquiring health, perks, bobbleheads, etc.., and shouldn't cause any issues in stat calculation for things like perks, other mods, and whatnot.
Next best way is probably ModAV used in a script, but is better suited for permanently changing a stat without the risk that SetAV brings. ModAV changes the script modifier for that stat, is remembered in the save game, but the changes made can only be reverted by another ModAV script call.

So...

Does it make sense to use damageAV and restoreAV for aggression and confidence? In my mind, it doesn't as these stats are usually fixed for a given NPC. (thanks again for that earlier suggestion. Two whole days I tried to figure that out.)

It really doesn't matter that much if you use DavageAV or ModAV for these as, like you say, they don't inherently change ingame, although other mods could possibly throw a wrench in there. The reason I say DamageAV / RestoreAV is preferred in this case is because you can reverse or negate any changed values you might miss/forget with a dispel.. not so with ModAV. Forget to remove a change you made one time and it's there in the save game for good. Probably not an issue if you test from a clean start, but it's worth considering anyway. The flip side is that with ModAV, you're a bit safer from other mods making changes as an indiscretionate dispel won't immediately negate the value changes you put in place.

For aggression, assistance, and confidence I've always used SetAV and set/adjust these values every time my NOC enters/leaves combat. I've never had an unexplained value for these when checking at the console. Other Variables - like skills- are a different story though!

Good advice Bonedog! This one goes right into the my mod notes.

Cheers,

Miax