The only way I know of fixing this faction is by killing the town folk in TS. That's no easy task either since the guards are all roughly lvl 30 ^^. Also, I'm sure there will be bad faction with the townspeople and stuff like that from it.
Faction is the one area where I feel SOE really needs to get some work done. We can get bad faction with Centaurs in TS, Fairies in EL, and other mobs in other places I'm sure. It's not even difficult either. Just kill 3 or 4 of em and it's all over. From there, there is no opposing faction to kill that will give you good faction here. Also, when you kill a bunch of stuff and reap some good faction hits you don't get any benefit from it. As of right now, in my experiences faction only serves to get you killed in this game.