No matter how high the sneak skill or how silently that person is killed, without you being noticed, all the surrounding faction members turn immediately hostile.
I can kill unnamed faction people silently without any repercussions, but cannot kill someone named "Colonel X" or anybody else who has a name without becoming hostile. I also incur a reputation penalty with the faction in question when I kill an important person. Why is it that nobody can see or hear me commit a murder, but everyone knows it is me regardless?