Well, there's the small proportion of people that are pirate IDed with no tag/Freelancer tag, who can be identified by name...everyone else (should) have the corresponding tag before their name, indicating themselves to be hostile to the local law enforcement or not.
As for people within an allied faction, this should be resolved in RP...an LPI officer charged with corruption would be tried and sentenced on the ground...they wouldn't have a chance to get into a ship, let alone go around with an IFF...
As for not being able to attack based on IFF, true...but you can attack anyone if you have an RP justification to do so...
I'm just having a hard time seeing what benefits this provides
![[Image: 2ecf33o.png]](http://i59.tinypic.com/2ecf33o.png)