I'm not sure, perhaps as high as 2000, but I'd like first to know though. You do take faction relationship into account, don't you? I mean, two NPCs in the same faction with high disposition (maybe applied as well to those with mid to mid-low disposition) between them should not fight each others over some loots, perhaps the most "respected" or higher-ranked NPC should get priority or some random probability to choose which NPC get the loot. Even between outlaws, there used to be a phrase "honor among thieves".
Fighting amongst themselves over an item might cause them to be distracted from an even greater threat (outsider). Also, I'm not sure exactly how that will be implemented, what I mean is the player have to be close enough to actually let the game "process" the "fighting for loots" scenario, am I right? I can't think (at least right now) where this 'scenario' most likely to occur. In a dungeon filled with Bandits and Marauders, both factions will certainly (by default) fight each others to the death, or perhaps among citizens after a group of outlaws charge into town? But that might http://www.youtube.com/watch?v=F8hetpJxXSw...
Factions will not be taken into account, more simply it will be based on the value of the loot, disposition, and responsibility. This way, bandits and marauders will still be able to fight each other over the loot (because they have low responsibility) while two mages guild members would not fight each other since they have higher responsibility and they get a disposition bonus for being in the same faction. If others see fit, I will make it so that thieves guild members won't fight each other over loot for fear of expulsion from the guild. Actually, perhaps I should make it so that MG, FG, and TG all won't fight another member from the same guild..
Who gets to keep the loot? I'm trying to make this simple right now, when BRAINS comes out its more intelligent decision making will be incorporated in Finders Keepers. Right now the NPC who takes the loot is the one who is winning the fight (measured by who is losing hp slower). I might also factor in each NPCs level, but I don't think it is very important at the moment.
NPCs will be smart enough not to fight over loot when there are threats around (evaluating combat situations in the main principle of http://tinyurl.com/sycBRAINSwhich this mod is a part of). The fighting over loot scenario will happen whenever two NPCs try to pick up the same loot item at the same time. The cell must be loaded for this behavior to occur so it will definitely happen if the NPCs are in the same interior or exterior cell as the player and it may even happen outside of the current cell if your game is configured to load surrounding cells (at least that's my guess).
About the "side-effects" yes, it is a possibility that NPCs will get in a faction war, but if it does happen it will be rare and NPCs will yield to each other fairly quickly anyways unless the item is worth killing over.