So I don't know if anyone else is having the same problem, but I can't seem to figure out if most people in the game are hostile from range or not. I play a sneaky archer or close to it. So there is no way at times that I can tell if on my travels through the mountains if a group of people in camps ahead are bandits, etc unless I am right in front of them?. I've numerously killed random travellers thinking they were the bad guys. Its getting a bit annoying at this point.

How do most of you handle this?

The only credible way to see who is a bandit and who's not, is to sneak up relatively close and listen what they say -they usually speak to themselves.

Mages on the other hand, the ones who'll kill you on sight, usually wear black robes.

Random travelers usually do not wear armor, although there are at least 2 types of armored travelers who aren't hostile.

If you have a bow fire an arrow close to them but not directly at them, if your hud isn't transparent they will show up red on your compass while they look for the disturbance.

I don't consider it to be a "problem." I dislike that MMO's color code everything as thought the game designers thought we were kindergarten children and I love that the Elder Scrolls does not do that. If I am not to make a mistake I have to actually pay attention to what I'm doing. This causes me to be less likely to charage in and shoot first and ask questions later. The more a game asks me to stay awake and pay attention the more I like it.

I use the detect life spell, hostiles will be red, non-hostiles will be blue. This will only pick up humans, the detect dead spell will pick up draugh and vampires.

You can get detect life at any level by helping an guy outside an fort west of Riften and south East of Ivarstead
http://www.uesp.net/wiki/Skyrim:Infiltration

Warning Detect Life is not fool proof, vampires are hostile except a few named however some bandits and mages might show up as friendly but will become hostile if you get to close, they will however tell you to stay away if they see you, however sprinting or sneaking in might not be an good idea as you might get to close before they turn on you.