... is what I would say if they implemented these changes. Because:
Your Bandit Rewards are now Jewels!
Featuring!
Extra Jewel-slots for every character! More Jewel slots? Yes, please!
Every character has three special, independent Jewel-slots unlocked by default. They are not connected to the rest of the tree and can only be used with the bandit Jewels.

Tooltip reads
"Only Bandit Jewels can be socketed here."
Bandit rewards are now Jewels! I'm on a horse!
They are quest items and as these they can't be traded or put in the stash.
Normal Jewels: Oaks/Kraityns/Aliras/Eramirs guard
Cruel Jewels: Oaks/Kraityns/Aliras/Eramirs blessing
Merc Jewels: Oaks/Kraityns/Aliras/Eramirs influx
Or whatever. Just some ideas. Eramirs Jewel could look like this:

They all show which difficulty they are from so you know where to switch them. Only Eramirs Jewel needs one unallocated Skill point if you want to remove it, obviously.
Kill all Bandits by default! They are douchbags anyway! (this is optional)
Remove the PvP element when partymembers want a different reward. It's confusing, especially to new players. Kill all bandits by default but when turning the quest in at Eramir, you get to choose the Jewel you want.
Change jewels anytime at Eramir, your friendly Bandit Jewel retailer!
To switch out your Jewel you need to use an Orb of Regret to get it out of its slot. For the skill-point Jewel you also have to have one free skill-point. Then go to Eramir Normal/Cruel/Merc with the Jewel in your inventory and he will offer you to trade it for a different one. For Free. Book of Reform recipe is gone.
The Bandit-questline is an ancient artifact and, the way it is now, totally obsolete with the new Jewel-system. This rework would be better for various reasons:
1. Have all your Bandit rewards at a glace (instead of having to check your quest-log).
2. See all the possible rewards at a glace when you choose them (good for newer players).
3. No confusing PvP element that kicks you out of HC for no reason (good for everyone really).
4. Only 1 or 2 Regret cost when you want to switch.
5. No more traveling around when you turn in two amulets at one Bandit lord.
6. New players know instantly how to change bandit rewards and don't have to look up vendor recipes.
7. You slaughter all their men anyway. It doesn't make sense that you murder your way to them, side with them, and then murder your way out of there again.
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