should be like morrowind. you can kill every one but get a message and chanse to reload if you kill a essential npc, if you don't than it's your own fault you can't compleet the quest
But i do not think for example a dragon on the other side of the map should be able to kill essential npc since you cant stop it. But if your in the same place as the dragon than sure it should be able to kill essential npc, your own fault if it does
That's the problem, and the cause, right there. Some people complained "oh, no, I've killed an npc essential to the plot, and my last save was hours ago. My game is ruined,
and it's all the game's fault."
As for the dragon on the other side of the map, they told us before launch there were killable, essential, and protected, able to be killed only by the player-character. More of the third, and less of the second, would be very welcome.