I need to have NPCs in my town function as guards, without actually reporting you for breaking the law, or arresting you if you have a bounty. They're basically just there to fight monsters that stray into the area.

Simply set their Alert status to zero

That's not quite what I'm looking for. I still want them to attack you if you steal things, and I don't want them to arrest you if you talk to them with a bounty.

I basically just need a way to make normal people attack monsters that come near them.

I believe in order for an NPC to have full guard behavior (e.g. attacking creatures and arresting criminals), they need to have their class set to Guard, and their Alarm rating set to 100. The Alarm may or may not be unnecessary in your case, you can play with it and see what works for you.

AiEscort player 0 0 0 0

Almost there... with this, I had dozens of guards coming from miles around to my aid, every time a cliff racer attacked me... which is a bit excessive. Also, if I try to murder someone, instead of fighting me, they help me out. Any way to tweak it to make them only help within a small area, and still recognize it when I break the law, and attack me for it? (Without trying to arrest me, like guards do.)