Precedence simply indicates which color will be shown if a character has multiple statuses. For example if a character is in a guild, a Criminal and a Murderer, they will highlight in red since Murderer has highest precedence.

Targeting Precedence (highest to lowest)
Murderer
Criminal
Rival Guild Member
Aggressor
Fellow Guild Member
lawfullyDamaged
Polymorphed player (if in non-human form)
Innocent

Will there be an equivalent to NotorietyQuery in the new system?

There will be no query for Karma. The affects of having negative Karma aren't nearly bad enough to warrant the time required to add such a query. Yesterday, I added a query for criminal acts. Basically, if you attack a creature, or heal a creature, depending on the state of that creature, the query "This may flag you criminal!" will come up.

Note, as with the previous notoriety query, the purpose of this is to prevent misclicks and accidents. It does not work for area affect spells or all other actions that could flag you criminal.

What happens if the flagged status of my target wears off during combat (the target changes from non-Innocent to Innocent)?

Players will have to pay attention to targeting. However, there are certain internal features that protect the attacker whenever this situation arises.

First, each individual 2-minute Aggressor timer resets whenever the Aggressor deals damage to or receives damage from an individual they are an an Aggressor to.

In addition, an internal list called the "lawfullyDamaged" list is specifically designed to protect characters who attack a non-Innocent. This list is defined as "The list of people whom I attacked or did damage to while they appeared non-blue to me". Anyone on this list whose non-Innocent status times out will highlight Grey to the list owner so that the list owner can continue to attack without fear of becoming Criminal.

The lawfullyDamaged list has individual 2 minute timers for each non-Innocent added to he list. An individual timer resets whenever the list owner deals damage to or receives damage from an individual on the list. Because of this, it is possible for the list owner and the characters on the lawfullyDamaged list to remain in combat long after the non-Innocent status of those on the lawfullyDamaged list has timed out.

For example, if Innocent Bob attacks Criminal Joe, Bob adds Joe to his lawfullyDamaged list which creates a 2-minute timer for Joe. As long as Bob continues to deal damage to or receive damage from Joe, the 2-minute timer will continue to reset. If Sue comes along and Joe is still a Criminal and Sue attacks Joe, she will add Joe to her lawfullyDamaged list and another 2-minute timer will be created. But if Joe's Criminal flag has worn off by the time Sue stumbles across the fight, Joe would be an Innocent to Sue. In this case, it will appear to Sue as if two Innocents are fighting.