Make sure any follower you have is told to stay, quite a distance away. Stand there and let him whack away at you, healing and/or blocking as necessary.
If you think the Wood Elf may be important later to not have upset at you (I don't know yet), maybe you can just pick his pocket til he agros, then when you're done, run away and pay your fine...I think that would make him speakable to again?
Or just attack the unarmed bandit in the barrow dungeon before he can pull the lever and trigger the trap, and he'll happily beat on you just like the wood elf.
SO far, my orc has levelled from 13 to 18 just letting the guy pound on him (Currently saved at this point) and he apparently never gets tired of pounding on you.
