I reloaded from the autosave and ran back along the path. When I got to the middle of town the light turned green this time.The first time, I jumped into the fjord and swam back so I wouldn't lead the thralls back to attack the villagers. Turns out they didn't come all the way back to the village after all (just their red light for awhile). They didn't jump in the water with me the first time, either, but the light stayed red the first time. I suspect that by jumping in the water I failed to activate some trigger in the code to let it know I was no longer in a battle situation. Maybe one more bug in the already overly long list.
Neither the monk nor any of the villagers was hostile to me at all, either in action or dialogue. I do still get the yellow light with the monk, but I thought that was tied to the monestary knowing who stole Thjorad. The way the game was behaving, I thought they might all be mad because I stole the book from the academy too.
