I'm on my second playthrough of the game, and I'm playing an evil character. Every so often I run into Caravan Merchants walking up and down the road. I was wondering if they eventually respawn after I kill them for their loot?

I seriously doubt that.

i dont think they respawn... in my third playthrough one fo the caravan was fighting with CL and one of merchant died.. since then.. lonley caravan merchant just walking with his merc