During a quest he called someone a murderer and was mad about it but at the same time after 100 in game days my character had racked up over 500 human kills, sure they were all bandits and the like but killing is killing.

Killing is killing but murder is murder

So he's a criminal because he wouldn't let the bandits kill him?

Self-defense.

My thief character ONLY kills bandits that attack him first, or have committed murder. Mercenaries attacking him with axes and bows? He better f***ing run.

Mirachuu, your Avatar picture picture amuses me.

But any way, you killing those bandits is not murder, it be justice!