We just started a new Wandering Heroes of Ogre Gate Campaign (HERE) and during play I realized we had been approaching Grudges all wrong. While I think the initial idea for a Grudge Encounter table was sound, the problem was it didn't connect well to ongoing events in the campaign. I realized that the Grudge Table needs to be built up as party's incur more grudges, and its use is mainly just a way to see if and when they come up in play. I don't know why this didn't occur to me before but because the group managed to potentially create two grudges in a single session, I think that helped things click in my head.
One interesting function the new table serves is it rewards parties who make a point of not developing new grudges. To some extant grudges may be unavoidable but parties who just wade through enemies and kill them mercilessly will find their actions come back to haunt them on a more regular basis than those who do not. That said, as you will see below, avoiding grudges is not such an easy thing, nor is it always the best decision.
In our last session we had two instances that could lead to grudges in the future. First the party killed Madame Hamaya of the Fragrant Petal after they had subdued her in battle. After that they allowed a member of Mystic Sword Sect to be killed during an interrogation. In both cases, I as the GM have to decide how likely it is that knowledge of these actions leak out. In one case they might be better protected because they made a point of committing the crime in a region of town controlled by their sect. In the other instance they hired a priest and directed him to the body. While a prudent gesture, it might be enough for the group to be connected to the death.
The dilemma characters in this sort of setting face when they confront opponents and decide to kill or merely subdue and release is important. Killing a foe eliminates them as a direct threat. And that matters because enemies do often come back and try to kill you later. Showing mercy avoids having to deal with relatives or friends seeking revenge down the road. So while parties don't want to go around making grudges left and right, being merciful has its consequences.
This is one of the things I love about the genre and work into my campaigns. Choices have an impact. Violence has consequences but so does non-violence.