For those that have it, I'm wondering if you can still commit crimes and teh guards magically know it and come running for you?

If you dont sneak, yes

Apparently if you kill all the witnesses, your bounty goes away.

Just don't kill any chickens and you will be fine.

That was always annoying, getting punished from crimes when no one was around to witness them. Pity it's still in the game, because I feel it takes some of the immersion away from it.

Seriously hope not. This bugged me to no end in oblivion...