Siverfale
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Possible consequences of killing both groups:
Loot from the knights and mercenaries.
No negative impact on reputation since both groups disappeared without a trace.
The possibility of looting the corpses and (most likely) the money.
Added 1 minute ago
Again, since playing through Revan's expansions requires understanding his original intent, it seems to me that the idea was that we would either watch the fight and admire the mercenaries, or help them altogether. This is the only significant consideration, in my opinion, in favor of helping the bandits.
Where do we go?
Where do we end up when we save the world?
Where do we end up when we save the world?