I think it depends on how much can you get yourself into the world and story. When you play CS/Quake death match the goal is simple, there's no second thought before pulling the trigger - there's not story to begin with, just frags/scores. But when you are playing some good RPG and come to some village, you could start the killing spree, see people around you crying, bleeding, crawling at your feet and begging for their lives... would you have any thoughts before pulling the trigger then?

My level of immersion usually is quite high if I like a game. Even today. Despite crud graphics and AI behavior. I'll use an imagination to tell the missing part of the story or give NPCs goals and desires. Simply because if feels better. By analogy, I would not kill innocent because that feels bad to me. So, if the day will come when all this missing part will get filled by brilliant AI I am not going to kill it either.

Probably the reason that people have no quarrels with killing everyone in a game is that it's very difficult to convince player that NPCs have a feelings. Even in modern AAA titles when you start shooting in the middle of the city it looks more ludicrous than real. People are frightened, sure, but very often they make really fake poses, run randomly with hands up, or do some other stupid things. It's hardly convincing, so shooting them is easy and players have no remorse about it. You can easily see they are fake. But should they behave really human-like, should you see their pain... would you still pull the trigger?

I mean that, if they're living, quitting the game is literally murder. Keep in mind that an intelligent AI wouldn't be hurt when you shot an NPC any more than a show writer would be hurt when a character got shot in the show.

There wouldn't be one AI that felt pain per NPC, it would be a general orchestrator deciding which NPC to make cry and how they should act.