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Can any profession live in either of the cities?
Some classes are only good, some are only evil, and some are neutral. The neutral classes can start in either city. A character can also do a Betrayal quest to leave their home town to join and be accepted by the opposing town.
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I guess they still have two opposing factions. Or was this cut out as well?
The two main factions are Qeynos and Freeport. There are many other factions throughout the game that will raise or lower your standing with that particular group of mobs.
In the Desert of Flames expansion, there are 3 rival factions in the city of Maj Dul. They are in a constant power struggle making the streets a precarious place. You can choose a faction to align to and support, however it turns the others against you.