If you've never spent any time in MM, you can and will be KoS to Fay. But if you even spend just a few days in MM, you'll be non-KoS.
On a side note, what lowers RoScale faction? I know killing the dragons like Fay and Trak, but do the wurms or anything like that in Skyfire also give negative factions? Might explain some of the KoS-ness if they had been hunting there for spells.
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