Had an interesting experience. I journeyed to a dwarfish area of the map. There were many hillocks (like 30 or so) and a single fortress. *Very* nearby was a goblin fortress and several dark pits. Interestingly, all of the hillocks go to the goblin fortress to trade (seems scary to me). Anyway, I ventured into one of the dark pits... and it was full of dwarfs! There were maybe 4 or 5 goblins up top, but in the area below, just dwarfs. I managed to subdue a couple of the dwarfs so that I could talk to them (and thereby use story telling as a way to see the history without going to legends mode).
The dark pit has a very sad history. It seems that it was originally settled by goblins, but soon afterwards dwarfs started coming to study. The abductions from the neighbouring dwarf hillocks were also very successful, so eventually there were many dwarfs living there. I don't know why, but dwarfs also started emigrating to the dark pit. These dwarfs all seem to worship the dwarven god of death and murder. It is now the year 260 and for the last 40 years or so, every year, 20 dwarfs would immigrate and then about 20 dwarfs would be murdered. Every single year! I don't really know what to make of that...
My companion was getting slightly injured (and I was running out of food), so I stopped attacking the dark pit and wandered into a nearby hillock. There I picked up a dwarf axe wielder whose entire family was either abducted by the dark pit, murdered in the dark pit, or murdered someone in the dark pit. Seriously, every 5 steps he mentions another one. At one point he seems to have had an extensive family.... Anyway, I decided take everybody to the dwarf fortress to see if we could get some steel armour.
Along the way, we encountered a camp. It appeared to be part of an invasion force from the dark pit (all the dwarfs were wearing dwarf nail crowns, dwarf bone rings, etc, etc). I had a "chat" with one of the marksdwarfs (beat him into submission, told him to cease hostilities, talked with him -- which allows you to tell stories about him afterwards... eventually, as usual, he had second thoughts about ceasing hostilities and lost his head). They were indeed from that dark pit. By the way, this was the first camp I've ever encountered in DF where everyone wasn't permanently asleep -- I wonder if the fact that I found them in the middle of the night had something to do with it...
I didn't really think much about this, but instead made my way back to the dwarf fortress, where I haggled for some steel armour and read many, many books. On the way back up to the surface, I noticed that there was fighting in the trade depot. The military commander was absolutely wailing on the philosophers. "This is the way of dwarf fortress", I thought and started wandering over to the tavern when I noticed several hostile military dwarfs. Looking more closely I could see that they were wearing the same dwarf bone jewellery as the dwarfs in the camp. My companions and I sprang into action. I killed at least 20, while my companions killed probably 3-4 each before things calmed down. However, the internal combat in the fortress lasted all night. I stayed out of it -- nobody was hostile to me. There was a mountain of corpses to clean up in the morning.
The next day, having had my fill of strange battles, I left the fortress with my companions. However, we once again encountered a roving band of dwarfs. I was ready for battle, but I realised that these dwarfs were not wearing any gruesome jewellery. In fact one of them was the baron consort of the dwarf civilisation. I chatted with him, but couldn't find out where they were going. They didn't have a camp, but were just pacing back and forth. Interested to know what he thought of me, I asked him and he said that I was a killer and unhinged. He pointed out that I had killed one of the invaders the night before (I had made no mention of it).
So, this was enough for me to pull out legends mode. Unfortunately, I'm playing with restricted history, so I can't piece the whole thing together. It appears, though, that the baron consort I met lived in the dwarf fortress. Legends mode made no mention of the attack on the fortress, except for tallying up all the dwarfs I killed. It also didn't mention anything going awry in the fortress (there was no insurrection attempt, for instance). Looking a little deeper, I discovered that the baron consort was abducted as a child and lived in the dark pit. Indeed, he had lived there at the same time as the dwarf I killed. The baron consort eventually escaped and moved to the dwarf fortress where he married the baroness. He was never a citizen of the goblin civilisation.
So, my interpretation of all the above is that the dwarfs of the dark pit attacked. The dwarf fortress defended itself (especially the military commander), but this caused a loyalty cascade in the fortress because the invading force included family of the people living in the fortress. I happened to be there and killed virtually the entire invading force. Eventually the loyalty cascade wound down and everything was fine. But there are dwarfs who now hate me for killing their friends and family.
Given that I'm an elf, I suppose it's a better reason to be hated than the normal one. Still, this is a first for me.