I wasn't sure where would be the most appropriate place to share this, and I don't
think it's a bug, but I could be wrong as I honestly cannot explain how it wouldn't be. Regardless, one time I was routinely talking to Guild Masters as I'd pass through towns, and I started coming across something I had never seen before. You know the quest to hunt down a specific criminal party? That quest is pretty much everywhere because there's such a strong abundance of varying outlaws. Well, this time I happened to be asked to track down and defeat...
a dwarven lord. The odd thing was that the nation (Vaegir I think) wasn't at war with the dwarves, nor were they even at a truce. I'm not sure the two nations had ever fought the entire game, and yet, the Guild Master was making claims that the dwarf lord was harassing villagers or some such.
A while later, I was at a Khergit city and the Guild Master there had asked me to hunt down
a lord of the drow, although he was a human who had defected from either the Khergit or the Sarranid; I couldn't tell but I would guess Sarranid. The Khergit were not at war with the drow, nor were they under a truce with them.
And then when I was in drow lands, I was offered a quest to defeat
an elven lord. At least this one wasn't as strange to me, I suppose, but it still was unusual. The elves and drow were not currently at war, but they did have a truce in place from previously fighting.
I did not accept any of these quests because I didn't want to risk causing some sort of problems with lords or nations, but I suppose I maybe should have just to see what might come of it, if anything. Anyway, I have never seen the bandit hunting quest reference lords before, so just wanted to share that oddity.