The UESP says that this quest actually does cause a 20-point reputation hit, but with the Merchants, not whatever region you're doing the quest in. I ran it in vanilla DF to double-check and that definitely is what happens.
If I'm reading the quest decompilation correctly, killing the wizard causes a 20-point reputation hit with the dummy NPC that provides a name for this wizard for use in questgiver dialogue and rumors and whatnot. Vanilla DF applies this reduction to your reputation with the Merchants (for some reason; the dummy NPC has a social group, but no faction) but it looks like DFUnity is applying it to your regional reputation instead.
I've attached before and after saves from when I ran this quest in Sentinel. For the sake of completeness (I don't think any of these touch factions or quests, but you never know), my mod list is:
- Roleplay Realism
- Tedious Travel
- Climates & Calories v1.3.1
- Roleplay Realism - Items
- Physical Combat and Armor Overhaul
- Convenient Clock