Well I certainly wouldn't tell them I'm actively hunting their head, but I guess it is polite to let them know when I come into contact. Never under any circumstance would details of any contract be disclosed to anybody, let alone the target.
I actually do go by IFF for first impressions as most players over level 40 either have a linked IFF and ID or are still trading. Any actions I take will of course be based upon ID, but if I see a group of Outcast IFFs heading towards me, I'm probably going to move pretty quickly in the opposite direction. I won't wait until they're within 2.5k to check their ID, or more importantly what ship they're flying and its loadout.
