Nostalrius Begins - Quality wow vanilla realm (1.12)

So, this: http://oi61.tinypic.com/2j1plih.jpg

To me thats clearly an exploit of how buggy the guard mechanics are to harass players and farm honor.
Is this a bannable offence?

your existance is an exploit.

Despite what the mouth-breathers in the WoW equivalent of Bronze V will insist -- NO, IT IS NOT BANNABLE to stand outside the aggro range of guards.