Just wondering: why do you think the games don't allow us to take prisoners, even common criminals like bandits are usually all have to be killed? To be honest, this question isn't pertaining only to TES, but to any kind of games featuring war. Even strategy games which feature large-scale battles usually don't have the option of taking the enemy alive. Do you agree it would be more realistic if we could arrest criminals by knocking them out and putting them in chains or, if we are playing evil characters, we could take hostages for ransom? In most games only few specific quests allow the option of taking a prisoner or turning criminals to authorities.

So would I need to visit town after fighting every single bandit? Or would I drag a group of 10-20 bandits around?

No, I mean it could be optional, just to add another variety to the gameplay.