Yeah, I went there as a mage and just killed everyone one by one.Fake papers do reset your moral because you killed people inside that mission (its intentional). The fake papers are a way to basically get forgiven by hostile npc's in cities. Certain people drop max reputation not current reputation yes. I dont know how you dropped your reputation that fast that low though, did you just murder a bunch of people?
I have saved Cocona 3 times on newest version while testing mods so if you want to provide details of how your situation happened I can help.
Should I have paused between kills or something?
I must say that for some defeated enemies the reputation dropped by 10, and for killing others by as much as 100.
At some point my reputation was -200.
UPD: And thanks for answering me, heh... I already thought I was being ignored for some reason... :>