I've got it so police respond to you, right now they just try to kill you but soon they'll respond to you realisticly. First with the intention of trying to arrest you, in which case you can run, but if you have a gun or you've been shooting at people they'll respond accordingly with force. I'm also implemeinting a "wanted" system, but it's going to be a little different than GTAs, I'll post more info later on that.
Here's what it looks like after my small gang went on a rampage in the middle of the city:
You'll be able to "buy off" certain areas of the city (your territory) which will allow you to perform illegal activivies in that area without police interference.
The frequency of shootings will lower the value of an area, and hinder the amount of money the businesses in the area can make, so it's a good idea to keep violent activies to other gang's territory :-)
Civilians will walk throughout the city, entering shops and making purchases (If you've ever played a "theme park" sim type game, you know what I mean) so you'll actually be able to see your illegal/legal businesses making money.
I've also added names under your gangsters, this is how they'll appear if your view to them is unobstructed (the heatlh bars only appear if they're currently selected):
If they're behind a building or something, I'll show their health (if selected), and an icon & their name under that.
If you put the mouse over a civilian or police officer, it will put that under them just so the player can be sure which NPC they want to interact with.
The combat AI is still basic, I've still got to make NPCs use cover, and some other more advanced logic, but that will come in the next few days.
Check out the civilian density on the left side of the street, they're all running away from me. It looks funny from the top-down view, they look like a heard of animals scattering.
More progress in a few days.