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So 1) It doesn't effect everyone, only the person who has it.
2) You can safely interact with anyone really, you'll just get a not so nice greeting, and you trading with them, they prices will be higher, if you're using the character with the "know it all" perk.
One of the main advantages of people liking you is cheaper prices, and they let you steal their useless items without getting hostile, also you get a neat greeting, where they call you their friend and stuff, so that's nice.
A totally unrelated question- do we get more customization choices when we unlock character respec or something? I can't, for my life, find this hairstyle in character creation:
http://i1360.photobucket.com/albums/r653/MTO2021/UncensoredFemArmor_zps60a0ae54.png
Lmao, what's this? The stud and his 3 b1ches? Ya kinky fella.
Oh, damn. Thanks.
You can safely take Know-it-all on your characters as long as you make sure you have one character that which will be your main character that does all the talking without it.
NPCs have a different attitude score for each of your characters. So let's say they catch character #2 stealing and he gets a -10 attitude, the rest of the party won't be affected.