I was in Angeline's aromatics and trying to talk to her, while doing so I accidentally picked up one of her cabages siting on the counter and acquired a bounty of 1. I was like okay no big deal, the gaurd will come and I'll pay the 1g bounty and be on my way... But instead all the gaurds attacked me and cut me down? Is this working as intended? Why am I never given the option to pay the bounty?

Did you try you unsheath and the resheath your weapon? If not, cut them all down.

I'm just thinking that kill on sight for a cabage is pretty rediculous.

Silly guards.

You have to sheath your weapons/spells. They will act as if you are hostile if you have anything unsheated. Even for a small bounty.

This is not the point. We know most of the times they stop when you sheathe, but why would they attack when the bounty is so low in the first place?