Depends on what you mean by "reacting". I'd definitely want to see someone be shocked when a person just drops dead right in front of them from an attack by an invisible force from around the corner (read: my Wood Elf marksman
), but I don't necessarily need people to later on in life talk about that person in a mournful sort of way, visit their grave, try to solve their murder, etc.
I personally would just like to see NPCs maybe cry if their best friend died in front of their eyes or scream or try to help them or something... Something other than the Oblivion-style "Help! Someone's been murdered!" and run off to tell a guard, who comes to the scene and maybe digs around in the deceased person's corpse a bit.