How come Khalid has THAC0 of 21 (*bigger* than base) in BG:EE

The easiest way to improve reputation is to donate at temples. The other option would be to do certain quests, which influence reputation.

The wiki has a detailled cost breakdown for buying reputation up as well as a list of subquests influencing reputation.

As for the guards (flaming fist soldiers), they should disappear or become neutral, once your reputation recovered. But I cannot say for certain.

Turns out I was missing something. Whether this is by design or by mistake, you have exactly one chance to re-recruit a dismissed custom party member into your party. That chance is immediately after you dismiss them. So to get Neera's gem bag, or any NPC equipment that you'd like:

• Go to the location containing the NPC with the gear you want.
• Move one of your party members far away from the others but on the same screen.
• Recruit the NPC, dismissing your far away party member.
• Pause the game.
• Move the desired gear onto nearby party members from the NPC.
• Unpause and allow your recently dismissed character to reach your party.
• Readmit that character and dismiss the NPC.

If you select "No" to avoid re-admitting the party member, you cannot get them back via normal means.