Hells yes to that question. I think it's one of the things that makes this game so special. There's a ton of sympathetic villains to be had in Skyrim. The most recent one I've seen was actually a wolf. I was raiding a bandit cave, killing everybody in sight, when I found a journal belonging to one of the bandits. He described how he had found this mangy, injured wolf in a raid of his own and decided to raise it as his pet. I reached a point where I had killed all of the bandits in the hideout, except the leader, who was hidden away in a room of his own. The cave floor was littered with bodies and I paused in my mission to loot them all. And then, as I was giving stuff to Lydia to carry home, I saw the wolf slowly entering the room behind her. He didn't attack me and he didn't run. He just sniffed at one of the fallen bodies, most likely his owner, like any sad, lost puppy would. I freaked out, thinking that he was going to attack me at any moment and killed him before he could do so. But the truth is, I honestly don't know if the dog had any malicious intent in it. I felt bad for killing someone's pet and in turn, the bandit who had given of himself to help a helpless dog.
