1. Respawns ALL living NPCs, including but not limited to named townsfolk, each game day. If at all possible, this should be a separate respawn timer from the one that respawns hostiles and guards, but I'd bet this is the part that is impossible/next to impossible. I'd be satisfied if the mod had them respawn on the same timer if that's all that can be done.
2. Does NOT respawn those that have been killed.
3. Respawns them truly so that if they have a leveled item in their inventory that provides random equipment or quanity, that it recalculates what item or how much they have on them. I'm pretty sure if they are indeed respawned, that this is a given, but I'm not 100%.
Such a mod would allow for NPCs to carry different amounts of gold, different food and other misc items, and wear different clothes each day if they have a leveled list item for any of these. It gets kind of boring and distracting that the familiar faces always have the same outfits and the same junk.
Its been a while, so forgive me that I don't remember the name of the thread used to locate mods.